because it impedes, got in the way of their plans to cut taxes and cut them substantially. because the paygo rules that you can cut taxes but you've got to go elsewhere in the code and find something that will offset the revenue loss. we are now renewing the paygo rule i making it statutory. first thing we did in the house when we were elected and had a majority was to implement the paygo rule as a rule of the house. it had a lot more stature, a lot more starch in it if we make a statutory. the senate has cast a vote that the house has cast that vote. will close the deal is we. the present will probably sign the bill next week. small step but it is a step in the right direction. it can help us again. in this decade. >> host: let's hear from dennis on our independent's line. >> caller: hello. our you doing? >> guest: fine. >> caller: i think you might have missed the earlier. you indicated that obama

inherited a $1.3 trillion deficit when it is really close to the 800 billion. so he has essentially double the deficit in one year. and i think about in 10 years, he is set to triple it. you people have lost touch with the american people. and i think you're pushing this country towards an armed revolution. >> guest: on january 7, 2009, the congressional budget office, which is usually nonpartisan, submitted to the congress of report that it submits every year, preliminary to the beginning of the budget season. and that is a report on the economic and budget outlook for the fourth coming years. so taking policies as existed then, two, three weeks before the president had taken the oath of office, and projecting those forward over the next 10 years, cbo found a deficit inherent in those policies of one point $3 trillion to the year 2009.

and a trillion dollars over a ten-year period. those are cbo's numbers. those are the numbers they projected before the first obama law was passed. and so there was a substantial deficit in the works. embedded in the budget before the president ever got to make his recommendations for what to do with it. and he did add to it. we did add to it, because and 27 days given the dire condition of the economy, given the recognition that you can bring the deficit down unless you can bring the economy up, you swim against, fight against a head wind and a heck of a headwind if you try to balance the budget in a deep recession. recognizing that, the president proposed a stimulus bill are a recovery act which has taken a toll on the budget and will continue to do so as it plays out. the total amount in $787 billion. but that has had salutary effects. when the president came to

office, the economy was shrinking. i was in january of 2008. 2009, the economy shrinking at a rate of 5.7% that month on an annual basis. this previous quarter the economy grew at 5.7%. that's quite a swing in less than a year spirit of time. while some of it is cyclical and it would've happened anyway, a large part of it can be laid to the thanks of the so-called stimulus plan or the recovery act. >> host: oil city pennsylvania. good morning, thomas. >> caller: good morning. >> guest: good morning. >> caller: congressman, i know the president says that there is to be no great for anybody under 250,000. my income is around $50,000. and i notice in the last several years that i saved about $1200 to $1500 a year in dividends

payments. but i'm wondering whether that's going to continue under the new plan. am i going to say that money again? or is that going to be wiped out? thank you very much. >> guest: i would hope you can save it again because we're getting the economy on its feet. it is moving again, moving forward again. at a rate we would like to see greater, we would like to see sustained. but the good news is we've had two quarters now with positive growth instead of contraction. that's an indication the recession is behind us. cannot say that with any great satisfaction. it could be a double dip. we could fall back because of commercial real estate and foreclosures and things like that. that it is still embedded in this economy and has to be corrected. but the economy looks better by far now that it did a year ago. >> host: op-ed piece in today's wall street journal. the president's budget nicked a few times from the budget on grounds that programs are cut of only if they aren't are succeeding in their aims.

the reductions in the budget, could they -- >> guest: i don't have a checklist that the president, and so did the director of ownby, peter orszag, there are about six or seven where they were being actually can. and he would be ready to point to some significant cuts and some minor cuts, just indicate they did look through the budget for places where they could make successful, reasonable cuts. particularly in programs that were no longer wanted. they have a long list to show that this is part of that budget ever. >> host: a comment from twitter. ralph writes is concerned about budget cuts in the department of labor. he says workers need strong enforcement of wage and hour law. >> guest: i would agree with that, but i don't think because in the labor department going to affect. >> host: let's take a look at the only security department budget and how that fared. as a major where this from the

"washington post" that gives us an overlay of some of the details. they talk about how we can get 4% more of its total budget. talk to us about what the aims are there and what does money can achieve. >> guest: there's a lot in the area of homeland security. we have done best we can with what we've got, but there still some glaring errors that need attention. and what we're doing deserves more support. so there is a small increase in homeland security over and above the freeze. it is one of the programs centralized to issue fund over and above the freeze level. i have seen different percentages, not that you mention, i saw to present last night, 4% yesterday, and 6%. so it depends on what's included. is the supplemental factor in this? it depends. but there is an increase over and above the freeze for home in security, and there should be.

>> host: thomas on the democratic line. >> caller: yes. i want to ask, why is it that the republicans or the democrats it up there and act like kids? or you get in the backroom and make some kind of off the wall do. i have been in this, and then the night of the president's speech, whatever, spoke, giving the address, the one republican walked out there and didn't matter what the president said, they were going to vote for nothing he wanted. look like a cat -- a bunch of kids out there saying you play my we are we ain't going to play at all. and it's, it's so disgusting watching what is going on up there. because i sit here and watch it because i'm retired and

disabled. and so i do -- that's about all i have time to do. other than get outside and try to figure something. >> guest: well, the things that were discussed and dealt with go to how we live in this country. education, of our children, the health care of our people, the right of people and the ability of people to find a job so that they can be self-supporting, earn their way in our society. these are things about which people have become very passionate, very determined and sometimes very stubborn. is not to me, surprise, that we should see these kind of statement that you talk about. if it comes across as being jobs, it shouldn't because it's really more fervor and more passion than it is childish ranting i think. the republicans have their legitimate points to make, in defense of our efforts to wrap up the economy. it makes for a lively debate.

one thing i would say is the framers, the founders of our country, did expect the congress, they did make it easy to legislate that they wanted us to fight. they want us to work over legislation in earnest, passionately, so we would try to get good results that when we did to legislate, it was good law. we have may have fallen short many times, but it is still an objective. the process is to have a vigorous and lively debate as we can possibly have so when we pass a law it will be put to the right kind of scrutiny. >> host: defense department, talk to us about how the defense department aired, the pentagon would get a 3.4% boost in its regular tour discretionary budget. plus extra money for the wars in iraq and afghanistan. >> guest: that's right. it was hoped that some of the expenditures are ramping up the

effort in afghanistan and pakistan would be offset by the savings as we withdrew from iraq. we have yet to see that phenomenon take place, but there would be to some extent an offset effect as the drawdown in iraq occurs. the total amount for defense, go up well over $700 billion next year when you include the supplemental for afghanistan and pakistan. so a substantial sum of money. the president's freeze does not apply to security. home insecurity board national security through the defense department. is unlimited, except they still exercise judgment over what needs to be spent for the purpose. but there's no arbitrary freeze on the defense budget. it will go up by three or 4%. and the amount provided for, for iraq, afghanistan and pakistan next year will be about $160 billion, a substantial sum of money.

>> host: kerry, independent's line in rome, georgia. good morning. >> caller: good morning. >> guest: good morning. >> caller: i'm a frustrated independent voter, so i'm frustrated both with democrats and republicans for your ineptness in getting with the problems of this country. this budget is a travesty. but what really concerns me is the out year budget that continue to show trillion dollar deficits for the next four to six years, or beyond. that is beyond a responsibility. i think this paygo thing that you are talking about is a joke. it's got so many holes in it that it is meaningless. i think his idea of a committee to look at bringing the budget back into order is just another way of passing the buck. that's what we a lack of you people to do. that's why the president is in office. i would expect him to come forward with a plan to balance the budget, not pass it off to some committee. it's beyond me how you people can stay in office when it comes to results. there's not a dimes worth of difference between a democrat

and republican. neither one of you are doing the job. >> guest: well, bear in mind like i said earlier, this budget, if applied, if adopted and implemented, takes a deficit this year from a trillion to $727 billion in four fiscal years. it cuts the deficit in half in that four-year period of time. the second five years of the 10 year projection for which the budget is written, there is an uptick. it is a significant increase in the out years in 2019 and 2020. i don't like the. i think the budget should have been kept on a downward trajectory, but the administration is effectively saying something about decisions have to be made to achieve that result, and we think they can best be made to a bipartisan commission. and we have a deficit reduction commission so to speak in 1997, and a lot of people scoff at us then. but the budget principles got together and what the administration went through the budget, paragraph part by part,

and put together a balanced budget agreement of 1997 which proposed a balanced budget for the first time with democrats and republicans both. in 30 years. we can do that again. it's going to take longer but it will probably will not be achieved unless we have a concerted effort. so you can scoff at what we are proposing, but it will work if the leadership ppor in both parties and members follow. >> host: "the wall street journal" opinion column yesterday. the president's priorities, it says , the budget would shift into the mandatory spending, at a cost of $307 billion over 10 years. the political goal here is to make a college education as much of a universal entitlement as social security. >> guest: the pell grant will go to $5500 this year and next year. what we have done is, this

administration, is take the student loan program which has largely been made by third parties and pass, and make it a try to loan program. so the subsidies that were given in the past years to lenders to make in student loans are being taken back. the department of education is going to make direct loans. this is a substantial savings. how much is hard to say. there's a dispute between cbo and omb and committees of education. but it runs into the billions. that's money that will be used to pay for the pell grant. in those years. >> host: was your response to this idea of column shifting, taking things out of discretion is shifting and moving them over into another cop so discretion spending -- 20 we should do it except in exceptional cases where the item were trying to treat ceases to be -- ceases to be something that needs to be appropriate every year, because we recognize it's going to be

appropriated and demands. so you make it mandatory like the pell grant type into the. because it's going to be continuing annual feature in would come into simply recognizing the reality of the budget item. >> host: peggy is going on republican's line. winston-salem north carolina. >> caller: good morning, and thank you for c-span. >> guest: good morning. >> caller: i would like to ask a question and then make a comment, please. did you all get your automatic cost-of-living on january 1? >> guest: a salary increase has been with us to i missed that boat and i watched c-span a lot. i am a retired and on social security and we didn't get one. i doubt i think s-6 of what you all make. amen to the previous caller. what are we paying you clowns out there almost $200,000 a year for if not to make decisions and not talk about freeze, but cut

the budget? we can keep going down this path. you all have no common sense at all. if i'm in my house like you'll do, i would have been broken in the poorhouse a long time ago. >> host: could i ask you, you've been involved in budget talks, negotiations and chairman of the budget committee for quite a while. is the tone different nouns that it is has been? >> guest: baton is angry now and the tone is apprehensive know. people out there who have been, been hurt by this recession. and we are seeing their attitudes come back to us looking for someone for whom is responsible. for who will have the banks to make bad loans and subprime loans and things of this nature, which caused a huge bailout. who did this, who did that? it must be the congress of the united states. and we see that and feel it quite a bit. health care is a good example. when we try to put a health care

package together, move the pieces around the so we could pay for it out of what we would otherwise spending on health care, we heard, people are very, very living on the edge right now concerned about their personal security, and having health insurance is a key part of their personal security. >> host: let's go to illinois. high, but. >> caller: good morning. you know, i'm a very frustrated democrat, when the president took over the unemployment rate in the united states was 3.5% 5%. it has approached eight tonight at the present passed a stainless package that guarantee the unemployment rate would drop below eight. which of course we know it is approaching 11 and 12. they gave all the stimulus money to the motor companies, to the banks, and to the auto industry. and i just don't understand. it just seems like you guys are so out of touch with the people. i don't understand what you are

thinking. we have unemployed people. one out of 10, two out of 10, and yet, you guys up on the outcome you guys are talking about this frees budget thing which only represents 17 percent of the budget. >> guest: well, that's 70% that we would restrain. it does have effects and we will save $250 billion over 10 year period of time. but otherwise would go to the left. i've let me remind you that in the quarter before president obama took the oath of office, the last quarter of 2008, the economy lost 622000 jobs on average during that period of time. in january 2009, when the president finally took the oath of office, january 20, the loss of jobs in that month alone was 790,000 jobs. within 27 days, the administration had put together a set of recommendations and sent to congress recommendations

for a recovery bill. and it has had a salutary effect. said local effects have also brought us back around, but these recovery act helped us move the unemployment situation significantly so that we now have economy that is growing. the average in the last quarter of last year was 69,000 jobs lost instead of 700,000 jobs lost. still not where we want to be. still not good enough. we want net job generation. less significant process. in the so-called recovery act, have to get some responsible, some credit for having that. >> host: to u.s.a. today reports u.s.a. today reports antiestablishment mood filled and illinois primary battles, looking at the race there for the u.s. senate seat. vacated by president obama. it looks like heading into the primary election, state treasurer, a democrat will likely face republican mark kirk representative and a false and

raise. also, sarah palin will rally for tea party activists >> host: also sarah palin a former governor of alaska will ballot for a tea party activist and harry reid's hometown. governor palu plans to go to nevada with a tea party movement. and governor pam has an op-ed piece today in the u.s.a. today about why she's be at the tea party convention this weekend. what is all of this telling you as a democrat and as a long-term -- >> guest: this is coming out of the worst recession since the great depression. the worst of all postwar recessions. unemployment is higher than it's been in years. in this country. we have seen failures of institutions that we took for granted. the mighty gm brought to its knees. citibank probably would be on its knees also, but for federal intervention. just go down the list of things,

that even in recessions past we didn't experience. an impact on the people, lost their jobs and they're wondering why can't these guys in washington get it together. and we understand that. that's our designated responsibility. but the truth of the matter is, this is a very tough recession. it's been very difficult to turn around. but the numbers sort of get there before the people do. because the jobs lag recovery. as we begin to recover, people began to go back to work, i think the attitude will lessen off somewhat. it was to be a lot of questioning about whether or not we want to make amends for what got us into the rut we are in right now. and so they will be criticism and things like this for sometime to come because the economy gets better i think the attitude of the american people will get better. >> host: ten as our next caller. independent line. called from northcote.

>> caller: thanks, c-span. mr. spratt, you obviously have an idea of just how angry americans our sins we have so little say in what takes place up in washington, d.c.. you mention, one quick, and i have a question for you. you mention that a 6% increase in homeland security, budget and -- >> guest: i'm not quite sure they present is but it is an increase over and above the frees. >> caller: but you did use the word small. if you could put we planted you said it was a small increase. i understand there was a 100% increase in the epa. i understand there's a very large increase in education department, now with al qaeda threatening us just yesterday, and imminent attack. i hope that some of that 6 percent on homeland security is bodybag. but what i want to move onto, and let you know, as i have some a representative that i've called over the years, we are an

older base economy. oil and the price of oil has drove our groceries through the roof. and is almost brought down airlines because of the cost of foreign oil. it has damaged our automotive industry because of the large vehicles that got stuck when oil in a. oil was $147. with the recession hit, per barrel when the recession hit. a lot of leveraging going on last year was because of oil. if you democrats, along with some republicans, don't see the wisdom and opening of anwr, opening up offshore, it should be an emergency meeting by congress to say, it's more important for us to bring down the price of oil. in your words, you said to bring the economy of, to bring -- your words, to bring the economy up, we have to bring the cost of living to time but i think we've got your point. let's go to our guest.

>> guest: look for the budget and you will see more money. look to the budget and you'll see more money than ever before in research and develop in this realm and for conservation implementation of conservation and efficiency means, which has to be part of our efforts to achieve energy independence. we've talked about it before. we put some money down on it before. this budget really makes it a priority for the first time. >> host: he wasn't quite right in his number did he talk about the epa's budget. tranter i don't know of the increase in epa, but it's not double i can guarantee. in fact, i think epa was cut. but in any event, it is nothing like what he indicated time i believe the epa was cut. oil taxes, are you concerned about that as well? >> guest: most of these are concessions in the oil industry a long time ago. and there's a good open debate as whether not, particularly in an atmosphere where oil is well

above. glas. . when, if ever, it is the budget going to be balanced? -- ever, is the budget going to be balanced? guest: one of the problems i had with this budget is it does find in the first five years, but in the out years, the deficit goes back up again. we need a concerted second effort. what the administration said was, in order to getmedicare, mn commission. it may not work.

it depends on who is in the commission and it depends on the receptivity of both houses. this is a right step to at least a step in the right direction towards forming type of budget actions we need to take to put the budget in balance for the first time in 20 years. i was a member of the 1997 group that did balance the budget for first time in 30 years. before i leave here i would like to be a part of a group that does the same thing for foreseeable future. >> representative john spratt from south carolina thanks for being here. >> guest: my pleasure.

>> today health and human services terri kathleen sebelius goes before the senate finance committee to testify on the president's fiscal year 2011 and proposals and budget requests. live coverage:30 eastern time here on c-span2. earlier, president obama spoke at a senate democratic policy conference. can see his remarks followed by a question and answer period tonight at 8:00, also on c-span2. just ahead, today's white house briefing press

secretary robert gibbs. that is scheduled for the top of the hour. we'll brif live coverage when 2 starts. in meantime, a conversation about the president's education proposals and budget requests for next year and this is from today's "washington journal." it is about 45 minutes. >> host: randy winegarten president of the american federation of teachers. that is the nation's second largest teachers union. thanks for being with us this morning. >> guest: great to be here in this beautiful snowy day in d.c.. >> host: talk to us about the president's budget and how it looks for education. >> guest: you have to look at the lens all that was cut. so we're very appreciative that education was not cut in this budget and there is some increases in it. because ultimately, i can't invest in the economy if you don't invest in education. that is our next generation of children and we saw that with the recovery act last

year in terms of the amount spent to avert the draconian cuts that helped throughout states and localty throughout the nalgs. having said that, i am concerns about the cut in the safety net which affect kids. we are concerned that we want to make sure that those dollars flow into classrooms for children. so a lot of the new dollars are of competitive grants and kids, particularly disadvantaged kids shouldn't have to rely on how well the adult writes the grant in order to get funding they need. >> host: how would you like to see that structure done differently? >> guest: title one, which is the money since the johnson administration has gone for poor kitsds to turn around schools and help them with their lives. that needs to go up as rate of inflation instead of being flat funded. we're going to work with the administration. we have in the past. we have great respect for secretary duncan and

ultimately we'll try to turn around. in the president's budget as well though is lots of signals about how to reauthorize the elementary and secondary act that used to be called no child left behind but everybody's moving away from even that title, in terms of how to make it a law that really helps all kids succeed. >> host: let's take a look at comments secretary duncan made on monday. >> the proed budget includes a $3 billion increase for competitive programs in the elementary and secondary education act. also known as no child left behind. it also signals the president's commitment to redesign the accountability system created by nclb so the focus on helping students graduate high school ready for success in college and in the world of work. the president's committed to strengthening the current accountability system and it will be based on out comes, and closing achievement gaps.

and far too many states, standards are too low and the existing law doesn't provide states with incentives to raise their standards. in fact the as many of you know, quite opposite is true. nclb also does little to reward progress. we want accountability reforms that factor in student growth, progress in closing achievement gaps, proefficiency towards college and career ready standards, high school graduation and college enrollments rates. >> host: what was your reaction to secretary duncan's comments? >> guest: all of that sounds great. we can't have this stagnant view of by 2014, you know, all schools are going to be proficient. we've seen that doesn't work. the notion of helping all kids be college and life ready is absolutely crucial. the issue is, how do we make that law not just about accountability, not just about sticks, which is what has happened in the last eight years under the bush administration and how do we make it about the building

blocks to help all kids succeed? it is part of what i tried to do in a speech that i delivered a couple of weeks ago. when you, when you toil in our field, and you think about it from the classroom level, what you, you spend a lot of time thinking about, how do we actually help teachers teach? how do we strengthen that connection between teachers and students so what they're teaching is what kids are also learning? so, for us, programs, and resources, are as important as accountability and accountability is crucial but can theability has to be not just top to bottom, but bottom to top. >> host: let's talk about accountability. you have said that indeed it is important to deal with ineffective teachers. >> guest: absolutely. >> host: people have a stereotype that unions want to protect teachers and don't deal with the bad apples. >> guest: it is, maybe it is because i've been, you know, a union activist for a long time but unions are about

how we help people, both workers and for us students have opportunity. it is not about protecting the status quo. it is not trying to keep things where they are. we have always fought to make life better for the middle class we always fought to believe, we always believe that education, as well as a good job is way out of poverty. so. so the issue becomes, how do we do that? so we said, let's try, and really, turn around the things we have to work on, and that's creating a robust, a different kind of teacher development and evaluation systems. most of the time, this is what happens. teachers go into schools. we used to tease, they're thrown the keys and said, somebody says to them, go do it. maybe nicely, maybe not nicely. and, evaluations are basically a principal coming

in once a year, maybe once every two years for 15 or 20. that's not what is going to help us help all kids learn. so what we've proposed is let's throw that out and really help on teacher creating, good teacher practice. looking at student learning, and, how and replicating what's working and abandoning what isn't and in fact, one of our locals and a school board already since the speech said, we want to try this. if we can get others and unions to try this so that we create systems of development and evaluation, that will really help our schools improve. >> host: in a speech earlier this month you talked about a way teachers could be judged. we know about test scores looking at student test scores as a reflection of the teacher but how would you like to see that changed?. >> guest: we know that student learning, what kids

have learned has to be a part of teacher evaluation. the issue becomes, how do we, make it a part, how do we do it in a fair way and how do we do it in a way that sees if the teacher contributed to a individual student's growth and how do we help the student with the other factors that may be at issue here like, how do we insure that kids are fed, have nutrition, have the extra care and the after-school care they need. all things that also contribute to their learning. so we've said, let's look at teacher practice in an evaluation. let's help improve that. let's also look at different ways to measure student learning, including test scores but not comparing one group of kids to another group of kids, but look at the student or students throughout that school year. >> host: monitor students progress in that year? >> guest: in that year, but

also do the things that we have to do to help level the playing field for poor kids because a child who can't see, a child who is disadvantaged, who doesn't have a nutritious breakfast, is not going to have the same opportunity to learn as a child who does. >> host: politico reported that terri dunk con, former chief executive -- secretary duncan. randi. winegarten, a processing rid of non-performers is too cumbersome and teachers unions want to come to the table to find a solution. why is that such a change? >> guest: a lot what is said but what is heard. i think we have an opportunity right now to change that if everybody wants to change. so we've been saying for a while, i said it in new york when i was president of the nyt, new york city local we

want measures to be fair and fast. teachers want to teach with other teachers who are effective. they want to help children and no one wants someone in the profigures that is unfit for it. we have to find ways that are fair and fast, not glacial and we saw that and we said, let's step up. let us take some responsibility here. step up and try to figure that out. and we asked ken feinberg to help us do that. now we can't do it alone. just like teachers can't, can't change a generation of students alone, we can't do that alone. the glue to all of this is the relationship between labor and management. >> host: let's go to our democrats line from maryland. good morning, sam. >> caller: good morning. this is near and dear to my heart. my and daughter-in-law are both educators inst mary's county. they're in a middle school which is considered failing.

one of the reasons it is failing is because of social economic issues down here. they have a lot of kids that have parents that have a lot of money because we're the naval air station but a lot of kids don't have any mon any. -- money. they rely on schools to get their food, breakfast and lunch, to keep them going but with this program of evaluating teachers, my son is an 8th grade history teacher. my daughter-in-law is a reading resources teacher. and in 8th grade, the kids are coming in and they can't read. but these people, these teachers are being told they have to be evaluated on their progress. they're passed along from elementary school and they can't read. my son mentioned to me that when he gives some of these tests, if he could read the test to the children they do okay. but they take the test, and they can't have it read to them, they do very poorly. so this is a problem. it has to be addressed in the middle, i mean elementary schools and keep

going all the way up the chain. this evaluation of teachers is very shortsighted. >> guest: look, you are absolutely we build on what each other does. one of the things we see a lot is that junior and high school teachers, i was a high school teacher for several years in brooklyn, new york, we champion the end of social promotion because we know that kids are not served by being promoted if they don't know their stuff. and so, this is part of the why teachers always talk about how we don't want to have ineffective teachers serving with us and ultimately the union has tried to figure out ways to help teachers teach. we've also tried to champion things like, you know, the colocation of these kind of services in a school level to make sure kids are disadvantaged can have knew trish brake fast, can have --

nutritious breakfast and after school activities they need. student learning has to be a part of it but it can't be done in crass ways that it's been done right now as a snapshot, a once a year, three hour test, that then, serves as the verdict for a student and for her teacher. >> host: todd, republican's line in hutchinson, minnesota. hi, todd. >> caller: well, hello there. i was wondering, from, from what i see there seems to be, there needs to be a restructuring of the priorities of what actually gets taught in what grade. i would be satisfied if kids could graduate from third or fourth grade never mind if they're smarter than a fifth grader with their reading writing and arithmetic skills. it would, because, that seems to be the, you talk

about a foundation, that would seem to be a good place to start for, you know, before one tackles the whole idea of, you know, political responsibility that they might learn later on in junior and senior high. >> guest: this is, this is what makes the work we do as teachers so difficult. we have to help all kids get well-rounded education. if, you will have to excuse me for the fact that i always focus on disadvantaged kids or poor kids, because if we lift up our kids who are the most disadvantaged we will not only help the country but we will turn around, we really make opportunity real in america. so, in, in cities and rural areas, we have to ignite the spark of learning. and that is done by teaching art and teaching music and engaging in physical fitness

and teaching, in my field which is social studies and civic responsibility. so you're right that kids absolutely need english and mathematics and reading is the foundation for all else but have to help kids have that well-rounded education, all kids. >> host: randi winegarten is our guest. she is president of american federation of teachers which is the second largest teachers union in the nation. it also represents paraprofessionals, school related personnel. higher education staff and faculty and nurses, local, state and federal employees and early childhood educators. you're coming at it from a wide range of ainge. >> guest: exactly. what we we see, what is interesting about all the people we represent, other than their amazing dedication to serving people, and i've seen it, i've been in 50 different places in america since i was president, since i started

as president of the union a year and a half ago, and from montana to st. louis to florida to california to oregon, to new york, my home, what you see is just this amazing dedication to what people do and wanting to make a difference in the lives of kids. >> host: melbourne, florida, darrell is on our independent line. hi. >> caller: good morning. >> host: good morning. >> caller: see my comment is about childhood development. it seems to me that you know, most learning takes place when kids are really, really, little. i think, you know, if parents were to spend more timing their kids read, from a really young age, you know, they would have a better shot. instead of throwing money at an issue, you know, why don't you guys get some of the smartest people that are proficient in childhood development and see if they can't find holes in the way

that people are being taught? >> guest: well, actually, look, it's, you're onto a fantastic idea, and that's part of the reason why many of us, the administration especially, has been pushing on the idea of early education. we know from child development theory and practice, that kids are sponges when they're two, three, four, five years old. so if we could actually create all day, pre-kindergarten programs that are high quality, we will be helping kids kids tremendously. we also know that in homes where you have a prin print-environment where kids hear words, where they're read to, where they, you know, play with blocks, play with legos, things like that, that kids are better prepared for school, but we have to help parents. you know, and parents are having a really tough time these days. we're still in the worst

recession, or getting out of the worst recession since the great depression, that's part of the reason we talk about having the government try to create these early childhood centers or having, schools having these services colocate in a school environment. >> host: kay, democrats line, in michigan. >> caller: hello? >> host: hi. >> caller: my phone beeped and i didn't know if you were speaking to me or not. i grew up in detroit and we had an excellent educational program. as a matter of fact, the head of neurory at john hopkins university went to my elementary, my public elementary school, my public middle school and my public high school. he went from southwestern high school to harvard. what we need is parent involvement in class, we need, order in the classroom,

and we need teacher coordination that the third grade teacher knows what the student is going to need in the fourth grade, and so on and so on. and it is, i think a way to get that is to have a, man i'm nervous, excuse me. to have a mandatory orientation for parents. and this would start from day one, from kindergarten all the way through at least elementary school where they are going to get their basics. and you need to let them know what is going to be expected of children when they come to school. because i hear a lot about overcrowding in the classroom, i remember, because i used to pass out of the milk there were at least 36 students in each of our classes and, you can have two students in a class, you can have 32 students in a class, but if you don't

have order, if the teacher doesn't have order and respect in the classroom, she's not going to be able to accomplish anything. >> guest: you are so, you know, i've been saying this to all of your callers today because, all of them are showing just how education is. how many factors are involved. it is fantastic when we have parental engagement. it really helps. but we have a responsibility for all kids regardless of whether we have parental engagement or not. so when we have it, we know that schools are going to be better and the kind of things we need to do to try to promote it is great. but we also, you're also very right about the issue about order and responsibility. what we have tried to do as a teachers union, and the teachers in detroit, i have to do a shoutout for them. they actually did a contract that had a lot of reforms in it this time but also they did some really tough stuff

to help save that school system in last contract. so, shoutout to them for saving the kids and saving detroit. but we need that kind of deep respect and it means that everybody has to take moreability, and the teachers and their unions are starting by saying let's throw out the current evaluation system and really focus how to develop great teachers, which translates into better student out comes, but we need other people's help, including parents, including elected officials, including our administrators. >> host: comment on twitter from carl who writes, is the principals control over budget and staff a factor? lots of district overhead could be bypassed and he suggested publishing, he or she suggested publishing evaluations of parents. >> guest: look, the principal's control of budget can be a factor. we need to have more money into, into schools and into classrooms directly but, we

also need to make sure the accountability system is 360 degrees. meaning when we have principal's control of budget decisions and, it's all about what the test scores may be or all about what looks good to the central administration, what we then see is principals will hire one or two people simply to do the record-keeping to insure that the records look good, instead of spending money on kids services and on teaching. >> host: go to oklahoma where marlon is the republicans line. hi, marlon, welcome to this program. >> caller: good morning. >> host: good morning. >> caller: how are y'all doing? >> host: how are you? >> caller: i'm doing fine. >> host: good. >> caller: i have a two-part question, the first part would be for k through sixth grade students. do you think it would be more feasible to allocate one hour during the day rehash information that is been covered as far as instruction, in order to make kids more engaged to

increase maybe their standardized test scores, nationally? and i guess the second part of my question would be, from 7th grade through high school to implement more of an extensive vocational training, let's say for electricians, ac units, car pen trior ought motive. as the -- automotive. curriculum gets more difficult and as well to engage them in school and increase them being college ready? let me take the second question first. i'm a big believer in career and tech ed which is what we call vocational ed these days. what i saw in the jurisdiction i worked for years, when we had robust career and tech ed programs, kids did well. those schools actually did better than some of the other schools in new york city, and kids went to college. exactly for the reasons you

said. it was an engagement. what you said to a student is, the simple truth of, if you actually learn about auto work or if you learn about engineering in this way, you'll, you can be gainfully employed and it became a point of enment for kids. frankly these days, you know, voc ed is different than it used to be. take west philadelphia high school where i was in september. those kids are speaking with the likes of tesla motors and others in creating race cars and beat out i think mit in this competition that they're involved in. your first question is harder in that you're absolutely right, we need to have a platform in order to advance learning. we need to make sure kids have actually learned what we taught but there are different ways to try to do it. and one of the things we thought that did not work is you just have two or three or four periods put together

of english or math. so we have to actually change and differentiate instruction dependent upon individual kids. that is part of what makes our craft our profession and education so tough. we're physicians of the mind in some ways but we have to differentiate instruction for each individual child to actually meet his or her needs. >> host: "the washington post" had an editorial this past week that was critical. union officials are disturbing inflexible toward charter schools and, it references you and says that even as you issue stern calls for ways of new thinking labor leaders in places such as new york use their political muscle to block important reforms. perhaps they d'think she means business. maybe they don't care. either way it is in the interest of students are being harmed. >> guest: i was very disappointed with that "washington post" editorial because they just didn't care about the facts. and, you know, i think that washington should not be an

evidence-free zone. the unions in new york actually tried to help increase the number of charter schools in new york. the union in new york, that they were really critical of, my local, we started a couple of charter schools. we represent teachers in charter schools. the issue is, we want to make sure that all schools are held to the same standards and what the charter school association and what the mayor of city of new york wanted was to give charters preferential treatment. ultimately that is not fair to the kids. charters should actually, if they have a lot to teach us, they should be actually taking more special needs kids, more disadvantaged kids. and what they're doing is just the opposite. so, what those unions were doing in new york is saying, we want to lift the cap. we want there to be more charters but, we need to hold all of us to the same accountability. not have some have

preferential treatment and others not. >> host: and at issue here is whether or not to lift the state's cap on charter schools. >> guest: exactly right. >> host: that is the discussion point that "the washington post" was talking about? >> guest: exactly. as i said i'm really disappointed because "the washington post" should know better. and, ultimately they should be calling out to have charter schools, if they know what they're doing, they should be helping more kids. and ultimately, parents, why do parents want charter schools? they want to have the safety that one of your callers talked about. they want to have the smaller class another your callers talked about. and what we can do if we're really intent on helping all kids, let's learn from the best. let's see where we have good practice. let's replicate it. and let's try to create that sustainability in public schools for all schools. >> host: now calling from

new york state, on the independent line. mel, welcome. >> caller: good morning and i agree with you on your theory on the charter schools but that's not what i called about. i have, i'm a great grand. i do not have a degree in anything but i wonder if you ever contacted waterbury elementary school and kindergarten, they know how to, i taught my great granddaughter. she took it into school. the teacher used it. teach my children, sound like cat, cat, there are so many words that can be spelled. >> guest: exactlyly. >> caller: i teach my grandchildren and great grandchildren how to use the english language. the school i'm talking about, the children in kindergarten could not only cite their alphabet from a to see. they could sing it from z

to a and knew all different sorts of things. they have tapes on it. >> guest: fantastic. >> caller: i suggest you contact them. what you just talked about in terms of what you do with your grandchildren is exactly what we would hope we would see throughout the country. guest: that work is crucial to us. what happens outside the classroom -- what happens inside the classroom has to be reinforced outside the classroom. we thank you for doing that. we would hope that we could figure out a way to promote that more often. host: democrat line, sparta, new jersey. caller: thank you for cspan. >> caller: hi, thanks for c-span. i had a comment. i grew up in new york city. and my neighborhood that i grew up in was mainly composed of

people who had fled from eastern europe and central europe so forth during the second world war and just before it. one the things that impressed me was the attitude of my friend's parents who said that the one thing that they could take with them when they left was their education. not their degrees, not their diplomas, but their education. >> right. >> caller: and that's one the things i think the parents have to impress on their kids in order to get a better educational system. which is it's the education that's important. and it will carry you far. it may be the only thing you have left in the end. okay? thank you very much. >> host: thank you. >> look we often, you know, when we talk these days about testing. and we say what is it that kids really have to know how to do? kids need to be learn to be problem solvers. they need to learn how to critically think. the world is much more

complicated that even when i grew up 30 years ago. so we know that that's really important. and that's what teachers fight so hard to have the running room to actually teach those skills to teach on a day like today when the snow is falling or has fallen. some creativity about snow and seeing if we can spark kids' imagination. maybe do a creative lesson and it. as opposed to constantly thinking what's on the test and have we covered everything on the test? >> host: the obama administration does hope to tie teacher evaluation and how they perform with they, with compensation. is this a matter that the unions have to find a technique that they like, testing at the beginning and end or they are going to get left behind. not all of the major unions are on board. >> guest: in new york city we

negotiated perform pay program that was school based in new haven and detroit and philadelphia, they did the same thing. the issue about pay is teachers deserve a decent pay. they deserve decent pay. most of us tease about how we didn't go into this profession to be rich. but teachers want to make sure that their families do better than they do. they want to be part of the middle class. and so unions fight to have competitive pay. on top of that, there's all sorts of things that we can do. and some of us have focused on things like these school-based bonuses. because what we think is really important is the collaborative environment in school. and so we -- and what we've -- what the research is shown that schools that really work are the

ones that are collaborative. the glue is the labor/management relationship. we've said, let's marry the concept of collaboration and pay together and do something like school-based bonuses. in the places that that have been tried, we see more of a joint focus on the mission. >> host: is there still room to have creative lessons when teachers are evaluated on student test scores and performance? >> guest: look, all of this has to be done in the right way. and what we've seen is when there's two much focus on the stick, too much focus on topdown accountability as opposed to how we help teachers teach, it doesn't work. i don't -- no child left behind did some very important things. it created a spotlight on kids that we were not serving as well as as we ought to. that was very important. but other the course of the

eight years, have haven't seen leaps and bounds of growth in schools. we need to do these things the right way. so accountability is important both top-down but also bottom-up. we have to give teachers who really care about what they are doing with kids. they went into teaching to make a difference in the lives of children. we have to give them the tools and conditions they need to do a good job. not just simply say to them, here's the keys, just do it. or now, and if you do it, we're going to pay you a little bit more. we need to make sure we change these systems. create continuous improvement in schools so that kids, all kids, not just some kids, can have -- can not simply dream their dreams but achieve them. >> let's hear from mary. pittman, new jersey. >> caller: hi, good morning. and he's a -- my husband's a

teacher. he's a great teacher. his children's scores are where they should be. the conservatives and progressives seem to blame the teachers without mentioning the parents. i know this discussion has included the parents. you know, you really have to discuss the parents and their roll and their respect for the teacher and also, you know, them teaching their children to respect the teacher. i think that's really important. >> guest: look. we can't do it alone. our job is to try and help all kids and create opportunity for children. teaching is really tough. and in this environment right now where we have to actually make sure that kids are safe and secure and free from the stress that may be happening because of the economic circumstances around them, it makes our job more important and tougher. having said that, teachers want

to make a difference in the lives of kids. as your caller just said, we can't do it alone. and teachers get really angry and upset when they are told to, you know, that they don't care or they are blamed for something that they really wants to do to help kids. >> host: let's go to richard, independent line in brooklyn, new york. >> caller: good morning to all of you. i'm just a comment and a question. i know that most people probably are able to judge teachers as inspirational or dull. i don't know if there's any way to teach a teacher how to be inspirational. but i think every student going through any perspective student knew who the good teacher were and who the bad teachers were. i don't know that the amount of money that you pore into the educational system has anything to do with making someone a good teacher or a bad teacher.

what's your opinion on that? >> guest: you know, let me actually take it very personally from my teaching experience. i was a far better teacher my third year than i was my first year. i may have had a lot of energy my first year, but i didn't have the experience and the practice. and this is -- our craft is pretty complicated and sophisticated. because what we are trying to do is not just -- it's not just and our love of kids. which i think as you just said is very important. but it's also about our knowledge of content area, and it's about our ability to transmit information, ask questions, differentuate instruction with kids. a lot of those skills we can learn over the course of time. so the issue that you're raising is, you know, who actually teaches. you know, we don't -- there are some schools where there's real joint participation in hiring

teachers. but the teachers union and teachers don't actually hire other teachers. but we do try and that's what we've been proposing in the last few weeks. how to create a development and evaluation system so we can create and help all teachers become the aspires, confident, effective teachers that our kids need and want. >> host: as the union of course was involved in looking at health care proposals sponsored by the democrats in both the house and senate. you had voiced some concerns about one of these taxes on some of the high-end plans. tell us about that and also where you hope to see things go. >> guest: look. we -- getting health care reformation, getting reform in health care is very critical. we don't -- just like you and your viewers are watching, we're watching as well what will happen now that the senate has a

different change in competition. affordable quality health care is critical for americans. and it's critical for the economy. what our objection was is that this excise tax that the senate seemed to want in the president seems to want, actually it'll hurt the middle class. and in many instances, when you actually looked at who it would impact, it wasn't about cadillac plans. because a lot of high-cost plans are not high-end plans. and given the monopolies that some of the insurance companies have, take a place like new hampshire. the current cost for public employees in new hampshire averages for family is $23,000. those are not the cadillac plans. that's just because of the nature of who's in the plan, the

cost of it, the gender differences, there's a lot of insurance factors that go into why it's a high-cost plan, not a high-end plan. so we said let's try and figure out a way to reduce cost or at least keep insurance for those who have played by the rules affordable. at the same time as we try to increase access for those that don't. >> host: democrats line is calling from fort worth, texas. >> caller: yes, good morning. i'd like to address management style. if you would take the clusters in a school, one high school, five or six middle schools and let's say seven or eight elementary schools and have the principal responsible for i.e., the high school principal

responsible for the middle school, i.e., which means that middle school principals and middle school control the fate of the elementary principals, you will have a lot more responsive system. because i know it's necessary to get my kids through 1-6, 7-9, et cetera, et cetera, et cetera. i think if you change that model of management, you will have a lot better system. and the second point is we need to move away from giving teachers raises just based upon degrees that are nonsubject matter. a degree in education as most people are fully aware, does not help to make a teacher a more effective teacher. it's subject matter, content that will make that teacher more effective. thank you. >> guest: look, you know, we'll debate some of these

points probably -- well, they'll be debating some of these probably when you and i are long gone. the issue is both about subject matter and about transfer of information. you are saying schools could do a better job. 10 years ago, we actually put out a better report on how they could do a better job, including how they should work with other parts of the university to reinforce subject matter. which i think is what you are saying, sir. the other issue, that's an interesting point in terms of creating a different way of looking at k-12 education. what you're, i think, saying is that all of us have to take more responsibility. that's what we try to say in the speech i delivered to the national press club this week as well. we know, for example, about how to create great teachers and great teaching.

that's what we tried top. you're right. other people have to take more responsibility. this has to be more ever a top -- more accountability from principals and systems instead of them simply deflecting responsibility to individual schools. >> host: charlotte, north carolina, betti, republicans line. >> guest: hi, i had a question about the early education program that you mentioned earlier that the administration is supporting. i just -- the issue that i have with this is that the -- and you is hear from the other callers, it seems to be what's happening in the home, the parents or the perspective and the attitude of the students. do they value education enough to do well in it? and so i'm wondering given all of the problems that public education has, whether it's media for teachers or management -- how to manage large groups and even helping the individual child and discovery learning disabilities or getting them

services they need. is this the solution pumping millions and millions of dollars into an early education program where you are going to bring in 3 year old who some are still learning to potty train. is that what we need to bring into the realm or take that money and fund it towards educating parents and teaching parents how to help their children and raise children who value education. when you teach the skills, they can teach those same parenting skills can be passed down to their children. and that is not something that -- we keep -- if we do this in the public education realm, we're not teaching anything to those children who will be parents one day expect that you need to send your kids off to school as early as possible. >> guest: look what i would -- again, i'm just talking about both our experience and the research. we know that if we invest $1 more in early childhood

education, and there's complexities with it, you have to find the space, it's not as -- it's more expensive because you need to have different kind of facilities with kids who are that young. if you invest $1 morer in early education, that means you reap a $7 of that investment later on in terms of kids who are graduating from high school, kids who are going to college, kids who are not dropping out. there is something about helping kids early when their minds are being molded that's very, very important. now what i would do, frankly, i would layer on to that what the caller just said. i've been o -- a johnny one note about colow indicating services at a school. have some parental programs or programs aimed at parenting and that kind of training on the weekends.

you have parents and teachers work together in terms of, you know, how we can strengthen what goes on in schools by what goes on at home. you can do literacy courses on the weekends in schools. just open the school house doors in a way that works for the community by colocating those services there. then you could do both. now you can't force parents to do that. but ultimately, if you create the service, i think a lot of parents would want to come. >> host: our guest randy weingarden taught. >> guest: it's great. thank you for being with us. >> we will hear more about the health care proposals and budget request later today when health and human services secretary kathleen sebeilus goes before

the finance committee. we're more here on c-span 2. earlier, president obama spoke at a senate democratic conference. you can see his remarks and questions and answer session. just ahead today white house press briefing, we expect that to begin shortly. while we wait for it, more from this morning's washington journal. more about the budget. we spoke with a reporter for a few minutes. here that is. >> capital legislatures david clark from cq politics.com. thanks for joining us david. >> thanks for having me. >> host: take a look at who will be on capital hill and who will be their audience. >> there are a lot of cabinet secretaries testifying. we have treasury secretary geithner in the ways and means

committee in the morning and peter orszag in the afternoon. you have admiral mullen and secretary gates meeting with the house of armed services committee. and labor secretary on the hill as well as the transportation secretary. i think, well, obviously they are going to be talking about a lot about the president's budget proposals. there's probably going to be a lot of talk about his jobs plan and what congress can do to try to get the unemployment rate down and jump start the economy. >> host: are there any hearings that look to be noteworthy? >> well, the secretary geithner and lmb director orszag will likely be an opportunity for republicans to go over the budget and particular the amount of high deficit and debt on display yesterday at the house and senate budget committees. that's generally the case, when the budget director comes to the hill, the other parties sort of

criticizes the approach. based on the last segment, admiral mullen and secretary gates for the a.m. armed services committee will be closely watched, not because of the budget but because of the don't task, don't tell policy. >> also looking at what else happened, secretary gates visit, overshadowed by don't ask, don't tell? did we hear from the budget? was there a good exchange? >> there was. the pentagon has a huge budget. it's highly focused on each year. two the big issues is once again the president is calling to cancel the c17 program as well as canceling turn off engine for the f35 program. that receives generally mixed reaction in congress, especially from lawmakers where those representatives or states or district where the planes are made. you can expect to hear more about that today.

also, the president included in his budget another round of war funding. about $160 billion for next year and additional $33 billion for this year for his so-called afghanistan surge. so those issues will be at top of questions. >> host: and you mention jobs as a big push today in the dialogue. can you give us a preview of what we may hear? >> yesterday, the president unvailed one of his proposals. using about $30 billion from the t.a.r.p. program to create a program to spur lending my small businesses. you think that'll be at the top of the list. obviously before when secretary geithner before the tax panel, there's going to be a lot of talk about what tax cuts should be enacted to help spur job growth. one of those is the idea of allowing -- giving some sort of tax break to employers who hire

new employees or give wage increases. that received mixed response, although it looks like it's going to be part of senate jobs bill moving fairly soon. i think that's -- that'll be the main focus on the jobs front today. >> host: david clarke, economic reporter at cqpolitics.com. thanks for being with us. >> thanks for having me. >> and we are looking in live now at the white house press briefing room. today's white house press briefing expected to begin shortly. you see the room has filled up. file we are looking in here, reminder again that later today, the health department and human services secretary kathleen sebeilus will go before the finance committee and talk about the health care proposals and budget request. we'll have that live at 3:30 eastern here on c-span two. earlier today, the president spoke at a senate democratic

policy conference. we're going to bring you his remarks and the question and answer period tonight at 8:00 eastern. also here on c-span 2. again, we're looking in live now at white house press believing room. today's press briefing will begin shortly. we'll just have a look. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> good afternoon. thank you y'all for coming. [laughter] >> it's not too late yet. [laughter] >> so i just want to make one quick announcement before we get started. let's everybody calm down for a second. tomorrow secretary locke will be giving the speech on a new major export initiative. the president laid out a goal for doubling exports in five years.

this initiative will lay out a path to get there. he has taken to the winners in the illinois primary. with that, julie, it'd be happy to take your questions. >> thank you. the president said this morning he would be with open to compromise on health care. what are the areas he'd be willing to compromise on? >> well, as the president said before he has specific principals he's laid out. we have gone far away in the hour and senate. we've made more progress than any administration in history when it comes to health care. he's not a legislative technician. he's not going to get into the nitty-gritty of what the best way forward at this point. he's hoping that legislators on capital hill will iron it out. >> he wasn't specific enough. will he be getting manufacture specific? >> well, the president has been active in the negotiations. in the sense that he's making sure that the folks in the senate, folks in the house have

a clear sense. but in term of actually writing the legislation and getting down to the line by line of what the best way to reach the final agreement is, he doesn't consider that to his front. >> last year when the bonuses were handed out, secretary geithner said he wasn't aware of the amount, was the administration aware of the bonuses handed out, where there any negotiations into the amount and extent of them? >> well, the news about the bonuses is not new. aig got some of their employees to give back $20,000 of those bonuses. obviously, the president is frustrated and angry that wall street continues to have the sense that excessive compensation should reward the risk taking we've seen over the last couple of years. things that brought us to the bunk. that why he haven't stopped fighting to make sure we get the

it under control. things like pay, doing it through financial regulatory reform. he's also been serious about making sure we get taxpayer money back. which is the bank fee, to make sure every single dime that went out comes back to the federal government. >> is there frustration that no matter what he says or do, the bonuses are still getting handed out? >> well, like i said before, the news is not new. some of the money is not going out. is he frustrated and angry about the fact that the bonus structure remains the same that it has been? absolutely. so the president is going to work on those item that is i mention. matt? >> a couple of questions, one economic, the other foreign. moody, the big agency issued a report that u.s. deficit threaten the triple a bond rating that the president budget plan is just a small step in the right direction.

is the administration taking that assessment seriously about the possible bond rating? and what, if anything, would the president do beyond what he's already announced to address the situation? >> well, the president didn't immediate moody to tell him we had a cut. he's going to try to cut the deficit in the long and short but trying to take care of the some of the issues. putting americans back to work, helping banks hire. he's concerned about the state of the country, he's going to continue to work to make sure we're taking on the deficit. >> moody's specifically says the president plan does not have time to address the problem. is the president going to basically ignore that? >> the president doesn't disagree the plan doesn't do enough. we need a fiscal commission in place to get bipartisan support

for some of the elements to bring down the deficit in the long term. we've gone a long way of cutting spending, getting rid of duplicate programs or programs that don't work. there's more we need to do. hopefully the fiscal commission will help to do just that. >> on iran, they said they fired a rocket capable of launching a satellite. what is the administration's level of concern that whether that technology or ability could be devoted towards military use even nuclear missile program? >> you know, obviously we've seen those reports. we're still checking them out to make sure they are access. a launch like that is obviously a provocative act. but the president believes it's not too late for iran to do the right thing, come to the table with the international community and live up to it's international obligations. >> president ahmadinejad said they were ready to go on the

deal, but reneged to allow the fuels be processed abroad. does the president see that as a serious offer? and would the u.s. take advantage of that? or is it a way of diverting attention or diverting efforts towards a new round of sanctions? >> well, some of the reports have been fragmentary. we haven't seen the whole transcript. if those comments indicate a change in position for iran, then president ahmadinejad should let the iaea know. >> two topics. first i wanted to ask you about the president of transportation and secretary on the hill saying people that people who have toyotas should stop driving them. he said that was a misstatement. can you clarify? what the white house helping the millions of toyota owners out there across the country to do? >> well, for starters, as, you know, nitza, the department of transportation has been very active in making sure americans

are kept safe on our roads. as it relates to toyota, making sure that they are living up to safety standards. including encouraging them on the recall. as relates to people who have toyota's new, go to experts at the department of transportation that know more about issue. all americans should get their cars checked out if think they might have a car that's a part of the recall, get it checked out. get it fixed it it if it is. >> is there a procedure in place for potential conflict of interest in terms of commenting on other karl calls and safety recall could ab issue? >> for starters, the secretary made clear what he think is the right thing to do. which is what i just said. as for being involved in other car companies?

this is something the president never wanted to get involved in. it would not have the impact to make sure americans are kept safe on our roads. >> i ask you about the information that came out about the abdullah and the hearing on the hill today where various republicans were saying this was just about political cover. and the white house was trying to leak the information selectively in order to protect the president. because he has a political problem right now. >> well, i would just say that before there was criticism from republicans that what we were doing wasn't working. now that people find out what we're doing is working, we're saying what's work withing is working. look, nothing came out that compromises any of the investigations or interrogations that are ongoing. we feel like we pursued the correct course in interrogating abdullah in both to the united

states and foreign partners in keeping the american people safe. there's no regrets on that. i will say it's washington. and there's a lot of politics that get played. and, you know, i was just watching and interview that was on cable news before i came out here. you got folks who are -- i never said that i don't watch cable news. in fact, it's part of my job, frankly. i watch broadcast too. but, you know, you have people who are criticizing things that we're doing in this administration that never criticized things that happen in the administration prior that are exactly the same. and without anything changing in the interim, the only thing that i can surmise is maybe there are some politics at play. >> it doesn't -- you are not denying that part of the motive was the push back on the president's political critics. and i wonder if by revealing that some of the abdul -- abdul

ma full lab's family is helping. >> for starters, i will say the reasons people were told about the success of the interviews that it was important to know that we are doing everything possible to keep the americans safe. they are working. they are getting evident that's actionable and we feel like we've pursued the right course. no information that's come out over the course of those briefings compromised that in any way. we don't feel we've given any information that will harm our ability to get some help. nope, we're just going to keep moving. >> i'm confused. if the investigation was not compromised in any way by what came out last night, why wait? presumably the reason for keeping it secret was because it could harm the investigation. now it comes out and you say it

didn't harm the investigation. >> sure. as you know, because it was said last night, ideally, this information was not meant to come out. but in order for the american people to know that we are doing everything possible to keep them safe, in order for our continued success in this effort, we made the determination that it was a good idea to make sure that people knew that our sources and that our methods here were working. >> wouldn't you want to share with the american people the maximum amount of information possible as long as it doesn't hurt the investigation? >> well, obviously this president has put a premium on transparency and making sure that people know what's happening, why he's making the decisions that he's making. i would say what happened last night falls under the rubric of making sure people know why he's making the decision and the success. >> why not a week or two? >> well, you can pick apart any piece of the process. if you go back all the way to december 25 of last year when it

all started, we feel like day by day, moment by moment, we have been success in getting the information that we need and telling the american people exactly what's going on. >> on the aig bonuses, is the president completely helpless to do anything about it? >> no, i wouldn't say he's helpless. what he's done -- well, for starters, specifically on the aig bonuses, some of the those employees have not taken some of those bonuses to the tune of $20 million. which is no small feat the. he thinks that going forward we need to do more things to get the bonuses under control. that's why he for legislation and getting some of this through financial reform. >> but in the past when this has happened, he has come out and voiced his outrage. he's not doing it now. is he saying i'm not able to do anything about it? >> keep in mind that your

network and other reporters have reported on it before for the president to holler at the top of their lungs just because there's old information being reported again. the only new information is good news, i don't think it makes sense for the president every single time to go out and say, here's what i'm thinking. the president is focused on creating jobs, getting our economy back on track. speaking to every question every single day doesn't necessarily put our country on the path to where we need to be on the long term. >> it's news today. why not be out there? >> you may have noticed from the white house that we don't jump on every single thing in the front page of the newspaper. >> should we read into this it >> you shouldn't read into it. you have a couple of things to do. >> will you get a bonus? [laughter] >> no, unfortunately, as you may know, there's a salary freeze in

place here. >> mr. admiral blair and mil her not supposed to say in the hearing yesterday that abdulmutallab is still talking? >> you would have to ask them. we've done a good job of sharing with the american people who we're doing to keep them safe. we're going to continue. >> my depression was the reason the briefings happened, the information was starting to get out there. the administration wanted to share the story to correct the record but the information that he was cooperating again. my impression is that blair and muller that let the information be known. >> there's a lot of information getting out there from all corners. there was importance in some of that information that was out there from the white house. but i don't agree with your characterization of their testimony. but we do feel like we did a good job of letting folks know

what we are up to. >> similar characterization. is that all right? well, the other question i have has to do with the statement that president obama made last week when speaking to the republican retreat, the house republican conference. he's referring to the stray cats and dogs in the health care legislation. he said, as example, he said, quote, we said from the start it was going to be important for us to be consistent and saying to people if you want to keep the health care you have, you can keep it. you're not going to have anybody between you and your doctor. some of that might have violated the pledge. you were process of eliminating those provisions. >> i'm not sure. i'll have to get back to you. chuck? >> a couple of questions. first when you say he called the primary, i assume the senate; right? not the governor's? >> he called both. >> not mark kirk? >> no, i think there's other

calls on the schedule. but he was not called. >> going back to some of the fact that is came out on last night's briefing, what do you say that the criticism that says okay, you guyed started to get information from him after january 17th, sometime last week. but there's obviously was a four-week gap where you got no information from him. so the argument is you didn't use every tool in the arsenal that you had to get information. and i guess there still hasn't been a clear sort of response from you guys as to why you didn't use every tool you could have used even in that say 24-hour period before he was mirandaed. >> i'm not sure what you mean by using every tool. >> getting other interrogators into the room, inviting other members of the intelligence community. >> well, i would say the president put his trust very much in the professionals have have been tracking down and fighting al qaeda for the last 10 years. and it was there determination that this course of action could

be the best one to extract the most amount of information. what we've seen over the course of the past weeks, that determination was correct and that we have gotten quite of bit of usable information that has helped across the intelligence community to keep the american people safe. so i think it's easy to sort of armchair quarterback this thing and say you could have done this, that, why didn't you do this? what we know, because of what we did, we were successful. the president is pleased with the results. >> forget the politics. one the criticize is the four-week gap. time is of the essence on all of this information. how do you know you wouldn't have gotten it sooner had you broughten on? >> how do you know anything that could have happened isn't the past differently. but what we do know -- >> they could have used -- >> what we do know is the way we did this, step by step, methodically working to get every piece of information that we possibly could, we were able to do it.

now there is criticism out there from folks on capital hill and not on capital hill that say we would have done this differently. the president's view that given the choice between politicians in washington and the men and women who have been fighting the battle the last ten years, he's going to talk to those folks who have been fighting al qaeda. i think the results speak for themselves. >> is there any indication -- are you saying this is always going to be the way that you handle this or could there be a next time before you miranda izing you would bring someone in? >> let's talk about the issue of mirandaizing. a lot of you saw the e-mail. in it explains the fbi's current policy. in the domestic investigation and operation guide, it says

clearly within the u.s. miranda warnings are required to be given prior to custodial interviews. this is the standard by which the fbi has given -- has mirandaized suspects over the course of the last several years. >> wait, the fbi had made the determination not to mirandaize him because there might be an immediate threat. >> right in consultation with the folks on the ground, poke -- with with folks in washington, they did what was best. so they did mirandaize him. the notion that going forward we've made a wide variety of changes on how we would connect the investigation or interrogation, that's premature. the president does think that after any event you should go back and see if there is ways you can do things better or differently. we're a little premature at this point. yeah, just say that it has been

successful. the way that we with conducted this investigation, the information that we've been able to get, has been of great help. >> can you quickly tell us why tim shriver is being held? >> i believe it's to talk about issues of mutual concern. and a little bit about the incident that happened in august that was reported previously. >> was it -- what can you tell us that the chief of staff is going to say to mr. shriver? >> i don't know. as, you know, he's apologized. we're all just moving forward. sir? >> sell me how things are going with respect to ron and pursuing these sanctions against the previous deal? >> well, i would just say that iran needs to live up to it's obligations to the international community. but as a result of some of our policies, we have seen

successes. we've seen that the international community is more united than it ever has been before. in this region, iran is more isolated from the international community than it has been before. and the nation of iran is divided internally about what the best way forward is. so our view is that the door is still open. there's an offer on the table. there's still time for iran to do the right thing. obviously, they have not just yet the. but if they don't, we'll apply all of the pressure that we can to make sure that they do. >> how much more time? you said december 31 was the time, also how much leverage to you have over china giving the tensions that have erupted in the last week or two? >> well, on time frame, i don't have a new time frame for you, necessarily. but i will say this is an issue that's deeply important to the president. we do think we've had an impact. as it related to china, the president's view our

relationship is mature enough that we can disagree on issues but work together to come to agreement. and we can also work with them on issues of mutual concern. like nuclear nonproliferation, the global economy, climate changes, things like that. >> will they back sanctions on iran? >> that's probably a better question for china. >> what does the white house see? is this akin to what happened in baltimore with the gop last week? and what's the ultimate usefulness of the senate democrats that are running for reelection questioning the president? >> well, the president's view that we ought to be as transparent as we can. and this meeting with senate democrats is an opportunity to an open fashion to talk to them about some of the challenges that we have. some of the things that we need to work together to get done. and take their questions on a variety of issues. you know, the senator -- i don't

know if it was senator reid or another senator picked who asked the questions. but it was a pretty productive exchange. and i think that everybody felt like folks got a lot out of it. [inaudible question] >> we're certainly more -- these meetings are certainly more on camera than they used to be. so in that sense, it is new. >> follow up on that? >> sure, dan. >> thanks. >> as you might know, there's a coalition of right and left bloggers, politico, people who watch cable tv and don't. including people who used to work in the administration and people who worked on the obama campaign who are asking both the president and the congressional republican leaders in the house and senate to hold these sessions to commit to holding them on a regular basis.

would the white house do that? >> well, you know, with david axelrod has talked about this a little. what he had to say was that part of the reason that friday was so successful with the gop conference that it was for the spontaneity that occurred there. and it's going to be hard to sort of recreate that spontaneity that happened. now the president thinks that there is space for more open dialogue, he's going to look for more opportunities to do things on camera and have open discussions on important issues. but in terms of regularly-scheduled event, i don't have anything for you on that. mark? >> bill, did the -- when the president at the town meeting yesterday said he hopes that he can get health care enacted this year, is this year his new and latest deadline? is there anything before that that he wants to set or is he going to give this congress the whole year to get it done? >> i think the urgency of

getting health care done because of the impact that the cost have on our federal deficit, that is has on small and large businesses, that it has on individuals, didn't go away. we want to get it done as soon as possible. we don't have a specific deadline for the next phase. >> are you able to say in what way he expects it might be enacted? that once the house vote or reconciliation or something -- >> no, he has not done that. roger? >> back to ray lahood this morning. did the administration ask mr. lahood to tone down the orangal statement? >> -- original statement. >> not that i know of. i think he said something he felt could be misconstrued. so he cleared it it up. >> another question. you mention locke is doing a speech tomorrow on the trade. does the administration plan to

renegotiation those trade accords before sending them to the hill? >> you'll have to wait for the speech to see what the trade policy that he's talking all about it. but this might surprise you, but i don't have any news about renegotiating trade agreements. >> the administration has had some trouble with columbia accord? >> well, people -- people come to this from different places. i think folks agree that exports help the economy, they help create american jobs. the president is committed to doubling exports over the course of the next five years. but, you know, nobody is going to agree on a specific trade accord just as it sits. so the president is going to continue to work with folks to make sure that we get to a good agreement that works for american workers and works for getting trade going. >> pakistan, the u.s. troops killed this morning.

is there any comment on that? do you guys have any more details on that? >> well, obviously our hearts go out to those families of the troops who were killed there today. i also saw that some of the girls who were at the school where they were were killed as well. which shows the heinousness of the type of criminal to inflict pain and suffering on the folks there. the president of the united states condemned these attacks. they only act to underscore the threat that these extremist in pakistan are to both pakistan and to the united states. and we're committed to rooting them out. >> one other question. the biofuels thing this afternoon, there's a report coming out saying that the u.s. is failing to meet the biofuels targets set in the '07 energy legislation. why is that? >> i don't have anything for you on that. there's a call at 4:00 you should hop on where we'll get

into granularity of biofuel policy. major? >> no, i'm not leaveing. >> how would you e evaluate the criticism from some that abdulmutallab might be in the context of prenegotiations and it might have been extracted before from the united states in the judicial position that they had to offer things on the table legally to get him to talk more? >> i think that's address gibbs' e-mail that that's not on the table. >> there's no conversation whatsoever occurs within the context of a plea deal? >> i mean i'm not going to say, but if you look at the e-mail that gibbs said, there's no plea on the table. >> all of these conversations happened earlier, but happening

in a different context. what's causing him to talk now? >> well, we went through some of the -- we went through some of the ways that he agreed to cooperate in terms of getting his family involved, which was helpful. and he's just decided that the best course of action is to cooperate and provide the information that he's decided to provide. but this is from gibbs' e-mail, he has not been offered anything. the department of justice takes the cooperation into consideration. but he's been offering nothing. >> that's formally or informally? >> i'm sorry, major. whether it's a brenden's letter to the hill, holder's letter today, the briefing yesterday, much more aggressive case being made by the white house and the administration on how you guys are waging the war on terror and fighting for national security. what changed in the last couple of days to prompt this

reaction? >> i don't know if i necessary agree that it's a much more aggressive case being made. the president has made speeches about afghanistan. holder has been out there, brenden has been out there. i think we've seen a pretty coordinated effort to make sure the american people know what's happening inside the administration and how hard the president is working to keep them safe. >> do you feel there was something that was not getting out that needed to get out more forcefully recently maybe from massachusetts or the criticism that you've been receiving or the abdulmutallab case itself. jake is right. look at communication, but it's different in volume, content, and tone than we've seen in the last month. >> obviously, this was a change in debate. obviously, this is a change in debate. and this administration is doing everything that it can to both make sure the american people know exactly what's happening inside the administration and also to answer questions that

people might have or challenges that might come about the way that we're doing things. i don't know that i necessary agree that we're out there more or more aggressively. because if you consider the fact that ever since this incident on christmas day we have been very aggressive in taking this on. >> you guys -- will you see -- do you say day afterdy we are getting hit by unfair criticism. behave to answer it. >> well, obviously nobody likes to take on criticism. but it's washington. and when you get a bunch of politicians talking about issues and you get a bunch of folks who flip-flop from one with part of an issue to another part of an issue. but there's no reason for them to have done it, expect that there happens to be a democratic president as opposeed to the republican president. national security has to be more important than individual's job security if they are a politician. i wouldn't characterize how we

feel the way that you have. but we have a job to do. to make sure the american people know everything that we're doing to keep them safe. we're going to continue to do that. >> questions that were raised that you've begun to answer for more information, because people the politicians were curious. >> i don't know that i'm in a position to render a verdict on the motives necessarily. the questions were raised. we answered them. >> just a couple of things. there's a super bowl party do you have a -- >> nope. >> okay. [laughter] >> the tuesday meeting with the bipartisan chairman? >> yes. >> yup. >> no particular agenda? >> well, i'm sure the agenda will be taking on some of the urgent challenges we face, jobs, the economy, what we can do on health care. so i think that some of those things will certainly be on the

agenda. >> one last thing, it seems there's something else that needs to be communicated than just directly to tim shriver about what ron said and what was quoted in the papers last week. >> what's your question? >> what else needs to be -- why bring in this larger group? is there something the administration is trying to get across to the larger group of interested partied on the issue as a result of what was publicked about what ron said? >> this is something that happened in august. it's something that ron has apologized for. it's issues of derogatory comments that make fun of one group or pick one against the other. don't do anything to further our political discourse. for that, rahm apologized. we're looking to move forward. >> does the president have to apologize? >> i don't know what conversation rahm had with the president. >> it seems to harken back some of the presence and early days of the administration.

after that, we know the democrats wanted stimulus and health care. what gives them any optimism that will be different now. do they get any indication from the republican that they want to play? >> well, if you listen to republicans have been says, they say they want to work with the president on the economy and health care. they are still attacks in ways they have awe tacked in the past. if you look at some of the elections, the american people have said they want folks in washington to work together. the president believes the way we can get to the best solutions and ideas is by working with the best republicans and democrats to get it done. it may be difficult to get that done in washington. it may not happen overnight. but the president is committed to working with democrats and republicans. but as he said in the state of the union, if republicans won't come along, he has a duty. he's going to do everything that he can in order to take on the things that the american sent

him to work on. >> is there any sense of optimism? >> you have to chip away at bipartisanship, one at a time. >> okay. somehow the idea that you're not doing everything possible to keep the american people safe is something that's taken hold in the population. is that a concern? >> well, the president wants to make sure that people know what the administration is doing and he's making an effort to do that. but if you you -- i hesitate to do this. but the only data that we have that shows how the american people are viewing the issue is public opinion polling. and public opinion poll shows that in poll after poll after poll, that the american people think the president is doing a good job to keep them safe, that he is effectively conducting the fight against extremist. all we can do is is everything that we can to make sure they know exactly what's going on. >> so like the point by point pushback on collins, that's not

rooted in some concern? >> the only data that we have are polls that say the american people are supporting. it will get the premise of your question. >> does the president think that toyota should be hit with civil penalties for a slow reaction? >> i think this is the issue of what ought to happen to toyota is something that's being discussed over nhtsa and the department of transportation. >> would you reach the level on the implications for drivers? >> for starters, the president thinks it's important that the american people on our roads and highways are safe. he thinks that the department of transfusion and nhtsa have done a good job of pushing toyota to make sure people are informed about what's going on. to make sure the vehicled were recalled. going forward, the place to get answers on what comes next are department of transportation and

nhtsa. >> i just have a question about the senate democrats meeting. you said that last friday was acceptable because it was spontaneous? >> in part. >> how spontaneous do you think today was? >> well, in fairness, with did tell them we were coming. >> i'm talking about the session itself. not the fact that you showed up. >> if you looked at the question, they weren't soft balls. they were tough questions that the president took on. they had a good exchange. >> okay. but my other question about it is -- my other question is today was a real kind of -- he really appealed to them to approximate good politics and getting health care done. but you seem to be kind of almost reverting to default by saying he's not going to get into the nitty-gritty or talk about the best way forward. what i'm wondering is does he

consider the completion, and of course the senate democrat are one of the main reasons health care didn't get done, because they didn't finish it in a year. but does the president consider the completion of the health care legislation to be a measurement of whether democrats can lead or not? >> well, i think that the president sees health care as something that we desperately need to take on. for a variety of reasons that don't have anything to do with politics. that includes the cost to the american family, the cost to american businesses, and what it's doing to our federal deficit. so pun didn'ts can make the termination. if you look at the last year, the president is proud of the accomplishments that he was able to make with the congress from passing the recovery act that helped create 2 million jobs, passing lilly ledbetter that women get equal pay for equal

work signing schip into law. he's pleased, but he's not satisfied that we've done enough. >> when you were asked in the health care, he said he want it is done as soon as possible, he said that all last year. and it didn't get done. one the criticisms is maybe he didn't crack the whip early enough or didn't heave it over the finish line himself earlier. i'm wondering if he's planning to do anything different this year. >> i wish i had some news for you on this. the president has made clear what his principals are. we talked to the republicans and democrats, he's going to talk to the leadership of both parties and he's going to keep making progress. it's too important not too. >> all right. they had some very barrel and stand by that is cartoon about the daily show. is anybody in the administration aware of these cartoons? does it affect policy in any

way? >> i haven't seen the cartoons. i missed the john stewart show. >> some of the people being executed in iran are as young as 18 years old. does that harden the administration's attitude and the sanctions towards iran. >> the president condemns those executions. he thinks it marks a new level on human rights. if they want to not be isolated from the international community and more from the iranian people, they need to respect universal human rights. :

and some of the things that have been held up like the nominees for example. there's unemployment insurance last month. it was something a little bit for a long time that was wildly popular. it ended up passing 88 to ten or

so. there's no point in holding things up that people support to just make a point that is until the american people. so we're trying to take as much progress as we can hear him to do that we're going to manyfold team. vmax as far as what's different now is just because the situation is a lot more serious. >> what i'm saying is people are holding up nominees who are actually really popular in the united states senate would support giving the opportunity. we need a full team in order to take on the things we've got going here. >> yes, hi. i'd like to take one more crack at the health care here. house speaker nancy pelosi has said that she could get the votes to pass the bill provided she guarantees the senate would act either first or during to amend the legislation. what is the white house doing to convey that message to senate democrats for the president rarely noted me to act and health care's defense? >> i think speaker pelosi had maker views clear and she's

probably commuting her own message to senate democrats. >> are you helping her in communicating the message? >> i think it speaker pelosi want to talk to democrats who knows where to find them. she indeed is talking to them. the president has made his health care message clear and we need to finish the work so we can get help son-in-law. stephen. >> there are roughly around 500 people and positive standing for elections in march. but role does the white house played in the last few days. i know you've been working this for a while. do you see now that there's a chance or credible elections in march? >> i'm going to have to get back to you on that. thank you. thanks. >> nice work, bill. >> nice job. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [applause] [applause]

[applause] >> can i get everyone's attention? [applause] i want to talk just for a brief minute about where we were. privatizing shows the security, a couple wars that are unpaid for, chileans of dollars of tax cuts unpaid for. let's talk about now where we were, but where we are. and i want to talk about with each of you some of the things we've done to establish where we are. the first thing we passed was this new president.

it was a landfill. not very sounding, but we had reviews, editorials all over the country, significant legislation. the most significant number of the legislation in more than a quarter of a century. within 2 million acres of wilderness, 1000 miles of wild and big river spirit 5000 miles of trail and many other things affecting all 50 states without exception. lilly ledbetter came to sing this week with a great smile and tremendous energy. we passed. we passed legislation. we passed legislation equalizing pay -- [applause] we advance the children's health insurance program now covering more than 14 million children that can go to the earth. [applause] something that people don't focus on very much that is one of my favorite things that i've ever been involved in is a

national service legislation, allowing people to be involved in the community and receive a small stipend for doing not mm can go to college. we did that. [applause] we did something really in the mortgage fraud. there's so many problems in housing but they were to be just so exacerbated had we not moved in and passed the laws to stop people from manipulating people who are in big, big trouble. credit cards, we talked a lot about what was happening with credit cards but we did something about it. now has exorbitant fees cannot be charged and is hidden cost no longer exists. and it's something that is a go harm people may not realize the things we did this so important as it relates to credit in america today. tobacco, tobacco, both my parents boats, all my family's notes, all started when they were kids. no longer.

now the federal drug administration regulates tobacco. pretty good year dweeb and try not for 60 years. [applause] economic recovery, job preservation, job creation, the stories you have to be told because about 60% of the money is still not out among people of our country. health care, we did remarkable things on health care and we've so much more to do. and i want to say to each of you senators, new democratic senators from maine to new hampshire to minnesota to louisiana and middle of this country and dakotas and nebraska, how hard we worked together. there have been some good teams in the history of this country. most of them are politically, but one of the greatest teams in the history of this country is this democratic team that you're part of i appreciate it very much. up

[applause] so now where are we going? well, we've got a lot to do. we've got economy, jobs, energy, financial reform, health care and we're going to move forward. why? because it's good politics and good for the country. i noticed that i talked about, is the man from hawaii, the president of the united states, barack obama. [applause] >> thank you. thank you, guys. thank you thank you very much. thank you. everybody, please have a seat. thank you. listen, you guys had to listen to me at the state of the union or at least pretend to listen. so, i'll try to keep a relatively brief. some opening remarks and then open it up for questions. first of all, i just want to thank harry reid. hot

[applause] i recently said is that one of the toughest jobs in washington, mentioning an institution that bites that bites you in nature as let's face it, you guys are a little difficult to manage. i've been a part of this caucus. i really don't think anybody could have done a better job and are more trying circumstances than harry reid and i think he deserves -- [applause] a huge round of applause. now, let me start by saying, we always knew this was going to be a difficult year to govern, an extraordinarily difficult year to govern. we began 2009 with the financial system on the brink of collapse, and economy's nearly 700,000 jobs per month, a $1.3 trillion deficit in two wars that were costly in every sense of the word here at and we knew that solutions will come easily or come quickly. we knew that the right decisions would be tough and sometimes

they would be unpopular. and we knew that we might have two make them sometimes without any help from our friends on the other side of the aisle. but we made those decisions. we went, those actions prevented another great depression. they broke the back of a severe recession. the economy that was shrinking by 6% a year ago is now growing at nearly 6% one year later. that's because of the work that you did. [applause] harry listed some of the work you did even under these difficult circumstances, extending health insurance to 4 million purple, helping consumers from getting ripped off by their credit card companies. some things that were noted or didn't get a lot of attention, you reform defense spending by

eliminating waste and save taxpayers billions while keeping us safe at the same time. he gave billions of dollars of tax only to small businesses and 95% of working families here in america. you did all this despite facing numerous procedural operations that are unprecedented. you may have looked to the statistics. you have to cast more votes to break filibusters last year than in the entire 1950's and 60's combined. that's 20 years of obstruction pack into just one. but you didn't let that stop you. as terry mentioned that though our mission is far from accomplished because while the worst of the storm has passed, far too many americans are still hurting in its wake. i know you've seen it back home in the shuttered businesses, the foreclosed homes. you've heard it from constituents who are desperate for work. and we've seen it in the burdens

that families have been grappling with long since this recession hits, issues we've been talking about now for years, the burden of working harder and longer for less and being unable to save enough to retire or to help a kid with college expenses, the extraordinarily constant rising cost of health care. these problems haven't gone away. it's still our responsibility to address them. all that's changed in the last two weeks is that our party has gone from having the largest senate majority in a generation to the second largest senate majority in a generation. and we've got to remember that. you know, there was apparently a headline after the massachusetts election, the village voice announced that republicans win a 41 -- 59 majority. [laughter] it's worth thinking about. we still have to leave. fabian and creating jobs have to

continue to be our focus in 2010. last year we gave small business the engines of job creation, tax relief and expanded lending her the sba. sba loans have gone up 70% to 80%, which by the way indicates the degree to which there is still huge demand among small businesses, some of the banks are saying we're not lending because there's not as much demand out there appeared there a lot of small businesses that are hungry for loans out there right now and we've made progress but they're still struggling. i propose additional ideas to help small businesses start up and higher, to raise wages and expand and to get the credit they need to stay afloat. you've made some of the same proposals as well. we should put them into action without delay. [applause] we've invested -- we've invested in america's infrastructure are

rebuilding roads and bridges and ports and railways, putting people to work strengthening our communities and our country. and as you know, the recovery act was designed so a lot of that work is going to be taking place this year, not just last year. many of the projects he funded, online and the next six months. we can do more and we should do so without delay. to the investments you made in clean energy startups, we've not only help at americans to work, we're on track to double or nations capacity and generate renewable energy over the next few years. i've propose additional tax credits that will promote private sector hiring and energy conservation. we should do that without delay. i think ideas like this should be pretty palatable to the other party. they seem pretty common sense. pretty centrist. we should be able to hear their ideas as well. that's why spoke to the republican caucus last friday. i think he was to the countries benefit that we had an open and

frank discussion about the challenges facing the american people. and our ideas to solve them. [applause] i've got to admit i had a little fun at that caucus. now, obviously, on some issues we didn't agree. but on some weight to it and i'm reminded that when it came to health insurance reform in particular i sought out and supported republican ideas from the start. so did you. max baucus. where is max? i can think he would testify that listening to republican ideas, so can chris dodd and tom harkin. you considered hundreds of republican amendments and incorporated many of their ideas into the legislation that passed the senate. so when i started hearing that we should accept the republican ideas, let's be clear, we have. what hasn't happened is the other side excepting our ideas. and i told them, i want to work together when we can and i meant

it. i believe that's the way to get things done for the american people. i also made it clear that we'll call them out when they say they want to work with us and we extend a hand and get a 15 return. last week, for example, you put up for a vote a bill is supported, conrad, greg, fiscal commission. we were sure this is going to be bipartisan only to the seven republicans who cosponsored the idea in the first place, suddenly decided to vote against it. now, i'm open to honest differences of opinion, but what i'm not open to his changing positions solely because its good short-term politics. what i'm not open to is a decision to stay on the sidelines and then assign blame. i have no patience for the kinds of political calculation that is

the cost of blocking everything is less than the cost of passing nothing. it basically says if you lose, i win. that's in the politics in washington for too long and the problem is it leaves the american people out of the equation. so i would just suggested that caucus, if anybody searching for lesson fors not to dothe american people are out of patience with business as usual. they're fed up with the washington that has become so absorbed with or without the newest down that we lost sight of how they're doing. they want us to start worrying less about losing our jobs and more about helping them keep their jobs. they want to see their business done in an open and transparent way. and when we took back the senate in 2007, we did so in part because we made a case that we'd be better on ethics and transparency. the way back that bypassing the

most sweeping ethics reform since watergate and by beginning to address earmark abuse. we should be proud of those accomplishments, but if we're going to erase that deficit of trust that they mention that the state of union, were still going to have to do more. and that's what i propose we were together to make all earmark request public on one central website before they come up for a vote. and to require lobbyists to discuss details of their contacts on behalf of their clients with the administration or with congress. that's why working with people like dick durbin who has been vocal on this, we've got to confront the db loophole that the supreme court recently opened in our campaign finance laws that allowed special interest to spend without limit to influence american elections. we've also got to get back to fiscal responsibility and i spoke about this in the state of the union. just ten years ago america had a budget surplus of over $200 billion. remember, people were worried about what might happen with all

the surplus is and whether it would create problems in the financial market. that was just a decade ago. after two wars, two tax cuts, prescription drug program, none of which were paid for, we face a deficit of over a trillion dollars, a touch over the next of a trillion dollars for what my administration spent a single dollar. we can't change the past that we can change the future and that's what i'm asking you to adopt the free nonsecurity discretionary spending for the next three years, starting next year. we are still having a tough time right now, given the economy is just learning to think of steam. the starting next year. that's when grateful that all of you restore the paygo rules that worked so well in the 1990's. ird mention the fiscal commission. we may not have been able to get the votes for statutory commission but i'm going to

appoint a commission by executive order because it's important for us to take these issues seriously. not just for us, but for children and her can children. let me just wrap up by saying this, i know these are tough times to hold public office. i'm in there in the arena with you. the need is great, the anger and anguish are intent, the economy is massive and so is the consequence no matter what lovers and buttons to push. sometimes it doesn't move as quickly as needed to provide relief to so many of our constituents. in that kind of circumstance, i think the natural political instinct is to tread lightly. keep your head down and to play it safe. i've said this before this caucus. i just want to say it again. for me, it is constantly important to remind myself why i got into this business in the first place.

why i'm willing to be away for my family for big stretches at a time, the financial sacrifices that so many of you have made, been subject to criticism constantly. you don't get ms for the same. you don't get in it for the title. you get a dinner to get somewhere in your background at some point in time you decided there was an issue that was so important that you are willing to stand up and be accounted. you are going to fight for something. and you decided you were going to run as a democrat because there was a core set of values within the democratic party about making sure that everybody had a fair shot, making sure that middle-class folks were treated fairly in our economy, making sure that those on the outside heavyweight in, that led

you to get involved in public service. and that's where we have to remind ourselves. especially when it's hard here at. you look at an issue right now like health care. so many other campaigns on the idea that we were going to change this health care system. so many of us look people in the eye who had been denied of a preexisting condition or just didn't have health insurance at all, or small-business owners of our communities who told us that their premiums have gone up 25% or 30% and we said we were going to change it. well, here we are, with a chance to change it. and all of you put extraordinary work last year into making serious changes that would not only reform the insurance industry, not only cover

30 million americans, but would also ban the cost for and save a trillion dollars on our deficit according to the congressional budget office. as a direct link between the work that you guys did on that and the reason that you got into public office in the first place. and so as we think about moving forward, i hope we don't lose sight of why we are here. we've got to finish the job on health care. we've got to finish the job on financial regulatory reform. [applause] we've got to finish the job -- we've got to finish the job even though it's hard. and i'm absolutely confident that if we do so in an open way, in a transparent way, in a spirit that says to our political opponents that we welcome their ideas. we are open to compromise, but

we are not willing to give up on the basic notion that this government can be responsive to ordinary people and help give them a handout so they can achieve their american dreams. we will not give up that idea. not mac if that's where we go, i'm confident politics in 2010 will take care of themselves. harry, thank you very much. let me take some questions. [applause] thank you. >> first question, arlen specter, let me tell everyone people coming in indicated they wanted to ask question. i taken a list. arlen specter is first. >> mr. president, i'll begin by applauding your decision to place the economy at the top of

the agenda, to put america back to work and provide jobs, jobs, jobs. i have a two-part question and just a restatement of the issue. we have lost 2,300,000 jobs as a result of the trade imbalance with china between 2001 and 2007. the remedies to save those jobs are very in effect it, long delays, proceedings before the comma international trade commission subject to being overruled by the president. we have final violating international law with subsidies and dumping. rarely a form of international antitrade. they take our money and then they landed back to s. and zero now a big part of the united states. the first part of my question

is, would you support more effective remedies to allow injured parties unions which boost jobs, companies which boost profit by endorsing a judicial remedy is not in u.s. courts, perhaps in an international core. and eliminates the aspect of having the itc decisions overruled by the president, done four times in 2003 to 2005, the cost of tremendous number of jobs on the basis of the national interest. and if we have an issue on the national, let the nation pay for it as opposed to the steel industry or the united steelworkers. and the second part of the question related is when china got into the world trade

organization, 15 of us in the body opposed. there were bilateral treaties and china has not lived up to its obligations to have its markets open to us, but take our markets and take our jobs. would you support an effort to revise perhaps even revoke those bilateral trading, which gives china such an unfair trade advantage? thank you. >> arlen, i would not be in favor of revoking the trade relationships that we've established with china. i have shown myself during the course of this year, more than willing to enforce our trade agreements at a much more serious way. and at times i've been criticized for it. there was a case involving foreign tires that were being sent in here and i said this was

an example of where we've got to put our foot down and show that we are serious about enforcement and it caused the usual fuss at the international level, but it was the right thing to do. having said that, i also believe that our future is going to be tied up with our ability to sell products all around the world and china is going to be one of our biggest markets. and asia is going to be one of our biggest markets. and for us to close ourselves off from that market would be a mistake. now, the point you're making, arlen, which is the right one is it's got to be reset for. so if we have established agreements in which both sides are supposed to open up their markets, we do so and then the other side is imposing a whole set of non-tariff barriers in

place. that's a problem. and it has to be squarely confronted. so the approach that we're taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on china and other countries to open up their markets and reciprocal ways. one of the challenges that we've got to address internationally as currency rates and how they match up to make sure the our goods are not artificially inflated in price and their goods are artificially deflated in price. that puts us at a huge competitive disadvantage. but what i don't want to do is for us as a country or as a party to shy away from the prospects of international competition. he does i think we've got the best workers on earth. we've got the most innovative products on earth and if we are able to compete on an even

playing field, nobody can beat us. and by the way, that will create jobs here in the united states. if we just increased our exports to asia, by a percentage point, by a fraction, it would mean hundreds of thousands, maybe millions of jobs here in the united states and its easily doable and that's why we are going to be putting a much bigger emphasis on export over the next several years. and that includes by the weight export promotion not just for large companies but for medium and small sized companies. because one of the challenges -- i was up in new hampshire yesterday and you saw this terrific new company that adjustment started out. it's only got 13, 14 employees at this point. but it has a new manufacturing technique for the component parts and l.e.d. light bulbs,

potentially could lower the price of l.e.d. light bulbs, cut them in half. and these folks, they potentially could market not just here in the united states, but this is a technology that could end up being sent all around the world here at but they don't have the money to set up their own foreign nonsense in beijing to navigate through the bureaucracy. they've got to have some help being over there. and so that's one of the things we really want to focus on in this coming year is making sure that our export import tanks, our trade offices, that we are existing not just the big guys, although we do want to help them but also to medium-sized and small businesses that have innovative products that could be marketed if they just got a little bit of help and a little bit of post in the united states government. >> senator michael bennet, colorado.

>> thanks for coming, mr. president. it's good to see you. you talked in the state of the union very well about a number of challenges we face as a country which are serious. even before we were driven into the worst recession since the great depression, illustrated of economic growth in this history and the first time in hillcrest family actually fell during a period of economic growth, no net jobs created since 1998, household wealth and fame at the end of the decade as it was at the beginning. and an education system that's not working well enough for kids. but on top of everything else, we got a $1.4 trillion deficit and $10 trillion of debt. i was saying that in colorado and document our kids are going to have to pay this back if we didn't make this decision that we've got to face up to. my daughter caroline who is ten and walked out with me at the end of that, just so you know i'm not paying that back. [laughter] she has the right attitude i

think. but that reciprocates your comment. at the same time, this place looks broken. our ability to make these decisions is open to enormous question in the wake of the health. discussion in particular. either women he other day in glenwood springs, colorado, asking where she could get her lobbyists in washington d.c. what are we going to do differently, what are you going to do differently, what do we need to do differently as democrats and republicans to fix this institution so that our democracy can actually withstand the tests that were facing right now? >> let me just make a couple observations. having served in the senate and now seen it from the perfect about the white house. first of all, whenever people ask me, why isn't washington working? and a fierce defender of the integrity and hard work of individual members.

which is by the way, matched up by when you look at polls, people hate congress but individual members, a lot of them feel are really working hard on their behalf. but the problem hereuse god as an institution that increasingly is not adapted to the demand of a hugely competitive 21st century economy. i think the senate in particular , the challenge that i gave to republicans and i will continue to issue it to republicans is if you want it governed, then you can't just say no. it can't just be about scoring points. there are multiple examples during the course of this year,

in which that's been the case. all of, i mentioned the filibuster record. we've had scores of pieces of legislation in which there was a filibuster, cloture had to be invoked and ended up passing 9210 or 8215 eared but that indicates is that degree to which were trying to gum up the works instead of getting business done. that is an institutional problem. in the senate, the filibuster only works if there is a genuine spirit of compromise and trying to solve problems as opposed to just having the place down. it was just having a place down, then it's not going to work. that's point number one. point number two, in terms of how we operate, we as democrats, i do think that the more open we are, the more transparent we

are, the more people know exactly how things are working and even if sometimes it takes longer to maintain that transparency, the better off we are. and i think the health care bill is a perfect example. the truth of the matter is that the process was painful and messy, but the innumerable hearings that were held to give an opportunity for the product to get refined so that i think the ultimate package after potential negotiations between the house and the senate is better than when we started. and there was a possibility and continues to be a possibility to be in discussions with the american people about what exactly that bill accomplishes. on the other hand, and i take some calls for this, at the end of the process, when we were

fighting through all these filibusters and trying to get it done quickly so that we could give it and start talking about other issues that were so important to the american people, some of that transparency got lost. and i think we paid a price for it. and so, it's important i think you constantly have our cards on the table. and welcome challenges and welcome questions. now if the republicans say that they can ensure every american for free, which is what was claimed the other day at no cost, i want to know. the cuts i told them, i said why would i want to get a bunch of ones on my head doing the hard thing if you've got the easy thing? but you've got to show me, you've got to prove to me that it actually works because i've talked to every health care expert out there and it turns out if you want to reform the

insurance system, if you want to make sure people without preexisting conditions are able to get insurance. if you want to provide coverage for people, if you want to bend the cost earth, then you need a comprehensive bill because this is a complicated area involving one thing in our economy. we should be open into that dialogue. and not underestimate the power of the american people over time, despite millions of dollars advertising to the contrary from the insurance industry and others. we should not underestimate the american people's willingness to say okay, i got it. and they're still going to be disagreements and some will disagree with us. we got to constantly make our case they think and not play an insider's game, play an outsider's game. alas when i would make about this -- you know what i think reduction ticket differs, michael. i think if everybody would excuse all the members of the

press who are here. if everybody turned off your cnn, your fox, you know, just turn off the tv msnbc, blogs, and just go talk to folks out there instead of being in this echo chamber, where the topic is constantly politics. the topic is politics. it is much more difficult to get a conversation focused on how are we going to help people in a conversation about how is this going to help or hurt somebody politically. and that's part of what the american people are just sick of. because they don't care frankly about majorities and minorities and process and this and that. they just want to know, are usually bring for me? and we've got to i.t. get out of the echo chamber.

that was a mistake that i think i made last year was just not getting out of here enough. and that it's helpful when you do it. [applause] >> mr. president, you told me, suggested, not to pay attention to blogs or watch cable tv and i followed that advice pretty good. [laughter] next question will be from the chair of our agricultural committee, the senator from arkansas, blanche lincoln. >> me neither, mr. president. i stay away from the tv than everything else. thank you so much for being with us today and i want to tell you i had an opportunity with my colleagues are a bipartisan meeting with the first lady on childhood obesity. it was a great meeting and we look forward to looking with her and you and your administration to tackle the problem on behalf

of our children and the future of our country. mr. president, i come from a seventh generation arkansas family. my dad was a good democrat and he was a great arkansan and he was very typical of arkansan and not he was very independent minded, as am i., and as i much of my constituents. and he is to tell me early on when i ran for congress, he said it really results and as i look at what's going on in my state and among my constituents i visited with them yesterday, good democrats, small business owner, who was extremely frustrated, extremely frustrated because there was a lack of certainty and predictability from his government for him to be able to read his businesses. he and his father have worked hard. they've built three or four different small businesses and he fears that there's no one in your administration that understands what it means to go work on monday and have to make a payroll on friday.

he wants results. he wants predictability. and i think that you're exactly right. people out there watching us, they see as nothing more condemn a crass and republicans appear fighting, fighting only to win a few political points. not to get the problem solved. and so i want to let go i guess some of what my colleague, michael bennet from colorado mentioned, but also to act to you in terms of where you're going. what can we tell the people in terms of predictability and certainty in getting this economy back on track? how are we going to do this and are we going to be willing as democrats, not only to reach out to republicans, but to push back in our own party for people who want extreme. and that for the common ground that's going to get us the success that we need, not only for constituents but for a

country in this global community and this global economy. are we willing of democrats to also push back on their own party and look for the common ground that we need to work with republicans than to get the answers and it's really the result that are going to count to her constituents. we appreciate the hard work that you put into it. >> well, look, there is no doubt that this past year has been an uncertain time for the american people, for businesses and for people employed by businesses. some of that uncertainty just has to do with the objective reality of this economy entering into a freefall. and so let's just be -- let's remind ourselves that if you've got an economy saddling contracting by 6% or loss of trillions of dollars of wealth, basically in the blink of an eye, or home values defending by

20%, that that's going to create a whole lot of uncertainty out there in the business environment and among families. and part of what we've done over the course of this year is to put a floor under people's feet. that's what the recovery or did. that's what the interventions in the financial markets did hear it stabilize the market, nobody's talking about market meltdown at this point. and people have a recovered all that they have lost in their four o. one kays, but they're feeling a little better when they opened that envelope now than when they did six months ago. state budgets were in freefall. that was stabilized, states are still going through incredible pain but they did not have to lay off teachers and firefighters and cost of the levels that they would've had to otherwise lay them off. that provided some stability and certainty. so the steps you've taken, as the congress, the steps are

taken as the administration have helped to stabilize things. now, moving forward, blanche, what you're going to hear from some folks is that the way to achieve even greater economic growth and keep in mind the economy is not growing at the 6% clips. so the question is when businesses start hiring because they are now making a profit. what you're going to start hearing is the only way to provide stability is to go back and do what we've been doing before the crisis. so, i noticed yesterday when we were -- there was some hearing about our proposal to provide additional financing to small businesses and tax credit to small businesses. some of our friends on the other side of the aisle said this won't help at all. but you have to do is to make sure that we continue the tax

breaks for wealthiest americans. that's really what's going to make a difference. well, if the agenda, if the price certainty is essentially for us to adopt the exact same proposals that were in place for eight years leading up to the biggest economic crisis since the great depression, we don't tinker with health care, let the insurance companies do what they want. we don't put in place any insurance reforms. we don't mess with the banks. let them keep on doing what they're doing now because we don't want to stir up wall street. the result is going to be the same. i don't know why we would expect a different outcome. pursuing the exact same policies that got us into this in the

first place. michael bennet articulated a very well. part of the reason people are feeling anxious right now is not just because of this current crisis, they've been going through this for ten years. they've been working and not see in the race. the costs have been going up, their spouses go into the workforce. they work as hard as they can. they're barely keeping their heads above water. they're trying to figure out how to retire. there's the more costs and help your dumb on my lap. college tuition skyrocket. there are more and more vulnerable and they have been for the last decade treading water. and if our response and that being, you know, because we don't want -- we don't want to stir things appear, we're just going to do the same thing that was being done before, then i don't know what differentiates us from the other guys. and i don't know why people

would say, boy, we really want to make sure that those democrats are in washington, fighting for us. so the point i'm making an blanche is exactly right, we've got to be nonideological about our approach to these things. we've got to make sure that our party understands that like it or not, we have to have a financial system that is healthy and functioning so we can't be demonizing every bank out there. we've got to be the party of business, small business and large business because they produce jobs. we've got to be in favor of competition on exports and trade. we don't want to be looking backwards. we can't just go back to the new deal and try to grab all the

same policies of the 1930's and think somehow they'd work in the 21st century. so blanche is exactly right that sometimes we get ideologically bogged down. i just want to find out what works. i know you do too and i know the people in arkansas do too. but when you're talking to the folks in arkansas, you also have to remind them what works is not just going back and doing the same things we were doing before. and yes, there is going to be some transition time. if we have a serious financial regulatory reform package, while the banks walk? yes. will they say this is the reason we're not lending? yes. the problem is we know right now they're not lending. and paying out big bonuses and we know that the existing regulatory system doesn't work. so we shouldn't be spooked by this notion that well, it's not

the time to take seriously in an intelligent way, not in a knee-jerk way to challenge a financial regulatory reforms they don't have banks that are too big to fail and are now putting taxpayers at risk and you're not putting the economy at risk. now is the time to do it. the same is true with health care. the same is true with health care. i promise you, at least as many small businesses out there, if you talk to them will say i just got my bill for my health insurance and it's gone up 40%. and we've got to do something for them. all right. [applause] >> next question, the junior senator from new york, christian jell-o brand. >> we've got a mic for you. >> thank you, mr. president.

i have an issue i'd like to raise that is very important to every new yorker and too many, many americans. and that's health care for our 9/11 responders and for other communities that live near ground zero. now these americans hail from every one of the 50 states and every congressional district in the entire united states. and now because of exposure to toxins from the collapse of the world trade center towers, there's about 20,000 people who are sick, some of them gravely ill, suffering from serious health factors, some are disabled and some have died. i introduced legislation to provide permanent care and proper compensation for these americans. and my question is, would you today commit to working with congress to pass comprehensive 9/11 -- comprehensive 9/11 helped build a fully paid for? >> i fully commit to working

with you guys. keep in mind that our budgets already significantly increases funding, precisely for this purpose. so i'm not just talking the talk. you know, we've been budgeting this as a top priority for the administration. i have confessed, kristen, i've not looked at all the details of your legislation but i know that not only you and chuck but everybody here wants to make sure that you shed such extraordinary courage and heroism during 9/11 that they are fittingly cared for and that's going to be something that we are going to be very interested in working with you on. >> thank you, mr. president. [applause] >> the next question is the chairperson environmental public works committee, barbara boxer. >> hi, barbara boxer.

>> great to see you here, mr. president and thank you for reading what the republican caucus at the house. i thought it was constructed for the american people. as senator feinstein and i tell her colleagues everyday, california is hurting. i think i know that you're aware of that. and they really want to see a fighting spirit in us, that we are committed, even though we've had some political setbacks to get the job done. and i just want to tell you as they watched you during the state of the union, listen to you, what you are doing now is really important for the folks that i represent it as you're showing that fighting spirit and matter what the adversity is and you're coming up with specific proposals. so i want to ask you about small businesses. we honor the job create 64% of new jobs over the last 15 years came from small business. your new proposal, which does mirror a couple of people. i look at senator merkley,

senator warner and others who have worked hard on this. can you do that by executive order because my understanding is you can use some of the tar ponds that were paid back and use those funds that have not been used. can you use that and get this going by executive order or do you need us to put the program into a jobs bill? and second, are you using your influence as much as he can to get the big banks to lend? they've dropped money by $12 billion over the last year. so i wonder if you can give us an update on that. >> first of all, and now, i have not taken trips to allentown, pennsylvania, ohio, most recently i was in baltimore. had a great time in baltimore. [laughter] just recently in new hampshire.

haven't been to searchlight yet, but we're going to get there. and everywhere i go, you talk to small business and they will tell you they are still experiencing a severe credit crunch. the larger businesses right now are able to get finance. even a medium-sized businesses, the credit markets have improved. smaller businesses, even if they are making a profit and have not missed a payment are finding that banks are adverse to providing them capital. now, two reasons that they cite. one is they say their bankers are telling them that the regulators are just looking over their shoulder too much and so the community banks feel that their hands are tied.

these are independent regulators. they are diligent in doing their jobs. obviously, they feel caught off guard because of the lack speculation in some cases of the banking industry before the financial crisis. do you get a sense that the pendulum has swung too far in the other direction. the challenge that we've got is with regard to be careful because these are independent regulators and we don't want to politicize them. treasury secretary gagner and others have done is to discuss with the regulators what we are hearing in the field and to make sure that there is a consistency of approach that doesn't prevent banks from making what are good loans are taking reasonable risks. so that's one thing we are hearing. the other thing though that is

still out there is that the larger banks generally haven't been in this market. a lot of the smaller companies never had access to them in the first place and we want to actually see if we can get more of those large banks to get into this marketplace. and when i met with a big bank ceos, this is something i pushed them on. they tell me and we have seen some confirmation of this that they are actually ramping up some of their small business lending and setting up more aggressive divisions, actively seeking out loans. so that's the effort that we're making for the private sector to do what it needs to do. in the meantime, you mention the specific proposals that we put forward here if i do think it's better to do than through legislation that their executive order. t.a.r.p. was a congressionally

created structure with some fairly stringent guidelines in terms of how we were supposed to approach it. it shouldn't be hard to do, though. it's a pretty simple concept. they have repaid money. there's $30 billion that we could take that authority been repaid and immediately apply that to a fund so that small banks, community banks are able to provide their small-business customers with greater lending. ..

president obama: businesses either because they can't find financing or because they are still just dipping their toe in the water has been hesitant to hire full-time workers. for us to start giving them some serious incentives, additional access to financing, could accelerate a process that otherwise could take a much longer time, and frankly all of those folks out there who are out of work, they can't afford to wait any longer. they need it now. >> we have time for one or two more questions. if the question is short. >> and the answer is short. [laughter] >> otherwise we'll only have one question. pat leyh.

>> thank you for coming here. these answers are so good. and need to be heard. you have a great sense of what the federal judiciary should be. i think back to president clinton's time when the other side blocked 61 of his judges. you've had some superb judges, you've talked to both republicans and democrats, said some superb names, and senator reid still have to file cloture. then pay pass by 100-0 or 90-10. my thing is this, because of what they did last time, we end up with great shortage and the most judicial crisis i think in our history. will you continue to work very hard to get up names as quickly as possible so that we can do

this and help us get these judges to -- i don't want the same judicial crisis to occur. you've had good nominees, can you commit to work with us on both parties and keep trying to get them through? >> this is going to be a priority. look, it's not just judges, unfortunately, it's also all of our federal appointees. we've got a huge backlog of folks who are viewed as well qualified. end up having a hold on them because of some completely unrelated piece of business. that's an example, michael, of the kind of stuff that americans just don't understand. on the judges front, we had a judge for the -- coming out of indiana, judge hamilton, who, everybody said was outstanding.

evan bayh, the democrat, dick lugar, republican all recommended. how long did it take us? six months. six to seven months for somebody who was supported by the democratic and republican senator from that state. and you can multiply that across the board. so, you know, we have to start highlighting the fact that this is not now we should be doing business. now, in fairness, in fairness when we were in the minority, there were some times where we blocked judges and appointees. i think it's fair to say we were a little more selective in how we did it. a lot more. the -- you know, so this is an example of where i'm going to reach out to mitch mcconnell, i know harry has as well. i'm going to say, look, if the government is going to work for

the american people, i can't have the administrator for gsa which runs every federal facility, all federal buildings, all across the country. here we are, we're trying to save billions of dollars, cut waste, claire mccaskill had been all on top of how we can we audit our spending. we can save billions of dollars in ending old leases that don't work or renegotiating them or consolidating buildings and official -- efficiencies. nobody can tell me the gsa i nominated. they are blocking her because of some unrelated manner. i don't know. you guys may know better than i do. and that is -- that has to end.

it has to end. and the american people want it to end. let's -- let's have a fight about real stuff. not -- don't hold this woman hostage. if you have an objection about my health care policies, then let's debate the health care policies. don't sudden end up having a gsa administrator who is stuck in limbo somewhere. because you don't like something else that we're doing. because that doesn't serve the american people. then they don't know what the argument is about. then it's just sort of a plague on both of your houses because it looks like you guys are just fighting all of the time. we have to put an end to that. >> i missed something on my list. if you could just be patient, we'll have two very short lists. the first question is going to come from the only person that's a member of the united states senate who has a spouse, sherry

brown from ohio. [laughter] >> we of the connie. >> we better ask questions. thank you for joining us. thank you for your visit to ohio. a week and a half ago, first presidential visit since harry truman in 1948. ten miles from there, oberlin college, one the great higher learns institutions, there was a building built there seven or eight years ago, fully powered by solar panels. it's the largest building any college campus in america is like that. those were bought in germany and japan. germany has an energy policy and a manufacturing policy. it's 75 miles west of there is toledo where you've been several times. toledo has more solar manufacturing jobs than any city in america.

it begs the question of two things, in terms of manufacturing policy and energy policy, we have all kinds of things and so many of our states manufacturing wind turbine components and -- but we're the only major industrial country in the world without a manufacturing policy. every rich country in the world has one. we don't. i know what you're doing with ron bloom in the white house and other things. how do we get there? when we read the articles in the paper that china is just exploding in terms of wind turbine manufacturing, solar manufacture,ing, how do we rebuild with manufacturing policy combined with an energy policy that gets us there? president obama: i hope people had a chance to read that article in the "new york times" i guess last sunday. talking about how china is not waiting, it is moving. the and already the anticipation is that they will lap us when it

comes to clean energy. now, they are not a democracy. and so they don't debate . and there are no filibuster rules. so obviously obviously the long term, a system that allows for robust debate and exchange of ideas is going to produce a better result. i believe that. but we have to understand that when it comes to come key issues like energy, we are at risk of falling behind. we've already fallen behind, but it's not irrevocable, because we still have the best research, potentially the best technology, the best universities, scientific, we have the most productive workers in the world. but we have to bring all of those things together into a coherent hole. now i think there are a couple

of elements to this. one in terms of manufacturing generally, you just mentioned ron bloom who we put in charge of a manufacturing task force is just issuing now a report to me about the direction we need to go to have some coordination when it comes to manufacturing. now this is not some big bureaucratic top-down industrial policy, it is figuring out how to coordinate universities, government, to look at the streakic opportunities, and then making those investments, filling holes that exist so we can be competitive with china's doing or germany's doing or what spain's doing. my hope is that during the course of this year we're going to be able to work with all 50 senators. because all of you have a steak in this to see where our are manufacturing opportunities and where can we plug some holes in

order to make sure that we're competitive internationally? specifically on clean energy, we know that's an opportunity. i continue to believe, and i'm not alone in this that the country that figures out most rapidly new forms of energy, and can commercialize new ideas is going to lead the 21st century economy. i think that is our growth model. [applause] >> final question. president obama i'm sorry. just one last thing you want to say about this. in order for us to maximize it, part of it is the good work that jeff's been doing in terms of finding the right incentives. we have to be open minded about a whole range of technologies. we've got to look at clean coal technology. we have to look at nuclear technology. we're going to be making some

significant announcements this year. this is an example leverage where we can't be stuck in the past in terms of how we see these things. we're not going to be able to ramp up solar and wind any time soon. and the economy still needs to grow. so we've got to look at how to make existing technologies and options better. but -- and this is just the point that i want to make, it came up in new hampshire yesterday, we still. one the best ways to be on the forefront on the -- in energy is to incentivize clean energy, and discourage the old sources or methods that aren't going to work in the future. and so the fact that joe lieberman is working with lindsey graham, john kerry has been all other this. the three of them are coming

together to try to find a workable, bipartisan structure so that we are incentivizing and rewarding the future. and understanding there's a transition to make sure the disruptions are minimized as we move into the new energy future. that's going to be vital. don't give up on that. i don't want us to say the easy way out is for us to give a bunch of tax credits to clean energy companies. the market works best when it's -- responds to price. and if they start seeing you know what dirty energy is a little pricier, clean energy is cheaper, they will innovate and think things through. i want to congratulation john kerry, joe lieberman, and lindsey graham who have been

very thoughtful in terms of how they are approaching this issue. >> final question. evan bayh, indiana. >> thank you for being with us. okay. i'll wait until the mic gets here. >> here. pass that there. president obama no, we can get you a mic. nice sneakers by the way. >> thank you. we got to stay light on your feet. mr. president, you've addressed this and several ore questioners have raised this. i'd like to present this in different way on the minds of people in any state and conservative democrats around the country. that's the issue of deficit and rising debt and restoring the fiscal health to where ought to be. the public and average citizens have been way ahead of the political class on this. they understand in the long run it's unsustainable. it's bad economics. they understand generationally,

it's unfair to our children to ask them to pay these bills. and most of all, there's a sense of unfairness. they are having to make sacrifices in their daily lives. so many in washington expect to have increases. ordinary citizens are making sacrifices. we want our earmarks and pet projects. why can't washington make the same sacrifices that we're willing to make? i think they realize the other party doesn't have much creditability. they handed you a $1.3 trillion deficit. vice president cheney said deficits didn't matter in his opinion. that's wrong. it's bad economics, and it's wrong. we have a job to do. many people across the country say i don't know if the democrats are willing to take this on. they think we want to tax and spend and have the backbone to stand up and make some of the hard decisions. to your credit, you've called for some things that aren't

always popular in our party. the first thing, the nonsecurity discretionary spending you got kicked in the shins by the left wing blogs. you called for restrain on earmarks. my question is speaking to independents, conservative democrats, modern republicans, people who know we have to do. why would the democrat party be trusted? are we willing to make some decisions to help the country held in a better direction? >> i'll tell you why. the last time it was balanced, it was under a democratic president who made some tough decisions. [laughter] president obama so i think that's pretty straightforward. bill clinton made some hard political decisions. some of you were there in congress. you know how tough those votes were. you got no help from the other side. as a consequence, the economy took off and you had a $200

billion surplus at the end of the presidency. he deserves enormous credit for that, those of you who took the vote deserve enormous credit the. that's why we should have creditability. we're still haunted by the debates that took place from the '70s, the '60s. all right? and that hasn't complete live worked through the political mindset. so we're still saddled with this notion of the tax and spend model when -- if you actually look at it, we'd been very fiscally responsible. now, having said that, we have been complicit in some ways over the last decade. the prescription drug bill, not paid for. two wars, not paid for. two tax cuts, not paid for. the emergence of a structural

deficit that is only going to grow because we all know that the biggest drivers are medicare and medicaid and as people get older, as the population gets older and as new technologies come online, people are demanding new services for health care. those are going to become more and more expensive. that's what's going to blow up the budget in the long term. so that answer your question, having said that, there's no doubt we lost trust. part of it was just, look, bad timing. it's like the cartoon; right? you're sort of standing there and suddenly they hand you ticking time bomb and, you know, it explodes and you've got all of this gun powder on your hands. you didn't construct the bomb. but you are holding it. and so what happened last year was we come in, you got a $1.3 trillion deficit that we're inheriting, you've got $3 trillion revenue that are lost

because of the recession, you have an $8 trillion projected debt over the next 10 years, and the you've got trillions more in protected deficits when you start looking, counting entitlements. everybody has been looking at ken conrad's chart here for the last several years about it. and so at that very moment, suddenly the had hadlines the people are seeing is bank bailout, recovery package, and it all kind of merges together into just this blob of spending and people aren't seeing how's this benefiting me? it just looks like washington business as usual. all of that suspicious gets amplified. it's completely understandable. i think the way that we regain trust is to pursue good policies, but not be affair also to explain these policies and to

be honest with the american people that we're not going to dig ourselves out of this hole over night. so a couple of things i've done. i have encouraged that we go back to paygo, pay as you go. people understand that concept. you pay as you go. i congratulate the senate on voting for it. i expect the house to get it done. i want to sign that. >> not a single republican. president obama: the second thing you that mentioned, is the nondefense discretionary freeze. one thing i want to mention though, it's not as if we're not going after defense as well. it's just -- it would be irresponsible when we have two wars for me to impose that same kind of limitation obvious my hands not knows what contingencies may be needed. if you look at what bob gates have been going in the defense

department and really goes after some sacred cows at pentagon, he's been serious. we've safed billions of dollars, we intent to keep it up as well. we've already proposed $20 billion worth of savings for this by eliminating and consolidating programs. we were poo poo. $17 billion, this is a pittance. only in the united states is $17 billion a pittance. it also has the danger. you have to chip away at this problem. so every dollar counts. the work that claire has done on auditing. if we can squeeze out $5 million here, and make this program work better. over times it creates good habits. it starts exercising the fission call restraint muscles that won't affect programs for people but will affect our bottom

line. so we are moving aggressively, we hope, this year we get that stuff done. but what we also have to understand if i take all of the steps that i have put forward and congress takes my lead we are prudent the in terms of the defense spending, and we do all of the things that we've talked about, we have still the structure deficit. we need to pay for the recovery act and the other extraordinary steps that we had to take last year. i will have covered what happened on my watch. that's important to understand. whatever i had to take that was extraordinary that you took with me, including the recovery act, we follow my budget outline, we will have taken care of and paid

for what happened on my watch. but what we will not have solved is the huge structural deficit that existed the day i walked in. and we've got to be able to tell the truth to the american people that that is hard to solve. the reason it's hard to solve is most of it is coming from entitlements that people like. and it has to do with the fact that there's this huge gap between the money being paid out and amount of money coming in. everybody understands this here. i think there's a misperception in the public. if you ask your average constituent, where the dollars go, they'll tell you 4 and 8. well, 4 and 8 accounts for 1%. then they say earmarks. i think we have to discipline ourself on earmarks because i think it makes people feel like we're not showing the same kind

of discipline that they are. we're absolutely right about that. oar marks account for about 1% of the budget. even if we eliminated all earmarks, it doesn't solve our problem. and as far as the argument that our colleagues on the other side of the aisle are making, i think it's important to explain to people that in order for us to balance the budget, while exempting, you have to cut nondiscretionary spending by 60%. cut it, that's everything. student loans, nasa, veterans programs, you maim it, we'd have to cut by 60%. that's just not going to happen. that's why we called for the

commission. we have to look at some tough long-term policies. i will personally do this. i will say to my republican friends, i want to solve it, i don't want to play politics on it. you have to step up. you have to fill the slots, put these people in a room and actually solve some of these problems. and i hope they do. you know, maybe i'm naive. i'm still counting on the notion that good policy is good politics. if you do the right thing and explain it clearly and do it openly, i'm confident that the american people, you can have an adult conversation and say this is not going to be easy and painless. we're going to be struggling for a while. but our future is bright.

if we show the came determination, i have every confidence that we are going to have a great 21st century. all right. thank you, everybody. god bless. [applause] [applause] [[applause]

[applause] [applause] [applause] >> and we will show you this event again later. president obama at today's senate democratic policy conference. you can see his remarks followed by the question and answer period tonight at 8:00 eastern here on c-span 2.

>> now for educators, c-span offers the new c-spanclassroom.. we've redesigned. you can find the most watched video clips organizized by subjects and topics. the latest in education news plus the chance to connect with other c-span classroom teachers. sign up at c-spanclassroom.org. >> look here at the senate finance committee room where health and human services secretary kathleen sebeilus will talk about the president's fiscal year 2011 health care propro sals and budget request. this is scheduled to start in just a few minutes here. and when it does, we'll bring

you live coverage here on c-span 2. in the mean time, an update on the president's budget request. this is from today's washington journal. [inaudible conversations] >> host: capital hill legislators, david clarke. thanks for joining us. >> thanks for having me. >> host: take us through who will be on capital hill and who will be the audience? >> well, this is going to be continued. yesterday there was a lot of cabinet secretaries. it'll be the same today. we have the treasury secretary geithner at the ways and means committee in the morning and he's followed by the white house budget director peter orszag in the afternoon. and you also have admiral mullen and secretary gates meeting with

the house of armed services committee and labor secretary as well as the transportation secretary. and i think, well, obviously they are going to be talking about a lot about the president's budget proposals. there's probably going to be a lot of talk about his jobs plan and what congress can do to try to get the unemployment rate down and jump start the economy. >> are there any hearings that look to be contentious or noteworthy? >> well, secretary geithner and omb director before ways and means will likely be an opportunity for republicans to grill them over the budget, in particular the amount of high deficits and the amount of debt on display yesterday at the house and senate budget committees. that's generally the case when the budget director comes to the hill, the other party sort of grills them and criticizes the approach. i think based on the segment, admiral mullen for the armed services committee will be

closely watched. that was from the budget point of view, but views of because of the don't ask, don't tell policy. >> host: also looking at what happens happened, secretary gates visited overshadowed by the don't ask, don't tell? was there a good exchange? >> there was. the pentagon has a huge budget. it's highly focused on each year. two of the big issue that is once again the president receive calling to cancel the c17 program as well as canceling the engine on the f35. that receives generally a mixed reaction in congress, especially from lawmakers where the districts already planned are made. you can expect to here more of that today. the president of the budget included a round of war funding about 60 billion. additional $33 billion for this

year and for the so-called afghanistan surge. those issues will be at top of the questions lawmakers will be asking. >> you mention jobs as a big push today in the dialogue. can you give us a preview of what we may hear? >> well, yesterday the president unvealed one of his propoa sals using $50 billion from t.a.r.p. to spread lending at small businesses. that will be at top of the list. obviously before secretary geithner before the tax panel there's going to be a lot of talk about what tax cuts should be enacted to help spur job growth. one of those is the idea of allowing, giving some sort of tax breaks to employees who hire new employees or give wage increases. that's received mix response on the hill. although it looks like it's going to be part of a senate jobs bill moving fairly soon.

that'll be probably the main focus on the job's front today. >> david clarke at cqpolitics.com. thanks for being with us. >> thanks for having me. >> and here we are once again back live in the senate finance committee meeting room. senators are entering the room. they are going to hear from health and human services secretary kathleen sebeilus on the president's fiscal year 2011 health care proposals and budget request. senators taking their places now. on the other c-span networks, c-span 1, house is in session. a series of vote there is. the house armed services subcommittee is also meeting. you can watch that on c-span 3. they are hearing testimony on the issue of sexual assault in the military. that again on c-span 3 and the house on c-span and here we are

with the senate finance committee on c-span 2. you're watching live coverage. we'll just look in. [inaudible ksss -- conversations] [inaudible conversation conversations] [inaudible conversations]

>> every worthwhile accomplishment has it's stages of drudgery and triumph. the beginning, a struggle, and a victory. the effort to connect the health care reform has the stages of deluge re. as we look back at progress that we made and a look ahead at the short distance that we have yet to go, i'll remain confident that we will soon move to the stages of triumph and victory. we're on the brink of accomplishing real health care reform. we're on the brink of reform that will help millions of americans to afford health care coverage. we're on the brink of reform

that will improve the quality and efficiency of health care delivery for all. every day reminds us of a need for reform. the latest report by the congressional budget office warns once again the growth of federal health care spending represents the quote single gratest scare to budget stability, unquote. that's because health care cost continue to rise faster than the growth of the economy and faster than the american wages. in the last eight years, 20% is the average for increase. the coverage has doubled more than five times and health insurance premiumed has tripled. one in four families spent more than on their health in 2009.

the high cost -- the ability of the american companies to compete. the high cost of health care make it is hard for small businesses to provide health coverage for new workers to stay afloat. american spends twice what the next highest sending country spends. with u.s. health care, far too often produces uneven quality and outcomes. more than $46 million americans like any form of health coverage. another $23 million are under insured. according to the cbo, in a decade $54 million americans will be uninsured. the actuary office thinks that number will go higher, reaching 57 million by 2019. we've tried reform. we created rights and protections in 1996. for people who purchased group health coverage. and we covered millions of uninsured children for the 1997 enactment of the children's health insurance program.

but we've reached a point where it's increasingly difficult to fix the system one step at a time. we cannot add 46 million people to a broken health system. we cannot meaningfully control the growth. over the past year, we have learned how hard it is to reform the health care system. but just because it's hard, does not mean that the task is any less necessary. just because it's hard does not mean that we should look the other way. and just because it's hard does not mean that we have to compromise so much that we fail to address the problems at hand. madame secretary, thank you for all of your hard work and the work of your department in helping us craft. thank to your guidance and leadership, we know that we can start covering the uninsured with preexisting conditions this year through high-risk poll. we know that we can provide

media assistance to bridge the medicare drug coverage gap. we know that we can jump start quality growth in medicare and medicaid. we know that we can make immediate progress on insurance market reform. i'm pleased to see the president's budget assumes enactment of health reform. the budget accurately reflects the health budget by $50 billion over the next decade. and the president said in the state of the union address, reform has also the potential to reduce the deficit by $1 trillion the second year. this year faces a full agenda. but given the daunting long run fiscal challenge that is we face, we cannot give up on the request for health reform that addresses the interconnected problem of cost, quality, and

access. i urge my colleagues on both sides of the aisle and both sides of the capital to not give up. we can't, we must succeed in reforming our health system. of course we face other daunting challenges. the medicare physician payment formula needs reform. hhs took an important step by removing drugs. just last week, the senate recognized a long-term solution will require a short-term investment by exempting part from the statutory paygo rules. i help that push would aid us in finding a permanent solution for the sake of our seniors that need continued access to medical care. beyond health care reform, they must reauthorize temporary assistance to needy families. we have more work to do to improve our child welfare program. the president's budget did not assume a five-year reauthorization.

we must use this year to lay the ground work for reauthorization. let me conclude where i began. i agree with president obama. we cannot give up on enactive comprehensive health care reform this year. we have gone well past this effort's beginning, we have endured our share of struggle, now let us ring the victory bell. certainly with the president of i feel confident we will accomplish that. >> thank you, mr. chairman. thank you secretary sebeilus for being us with today, particularly in these very extraordinary times. our nation is beginning a slow recovery from one of our worst economic downturns. now may be more than any time in history, people are focused on our nation's economic challenges and their worried or maybe words that come out of my town meetings, people say to me, i'm scared.

they've watched unemployment sore, auto industry going to bankruptcy. banks shutting their doors and families struggling to make ends meet. and as our constituents have tightened their belts and reign in household spending, they've seen some in washington support spending increase after spending increase. the federal debt as increased by $1.3 trillion since president obama took off -- office. on the heels, they've seen the way made for more deficit spending. as i travel aroundize, my constituents know these facts and figure out -- they know the figures affecting our economy. as well as the debt, and they know more than many washington insiders. they also know that this budget only takes minor steps towards a very major problem.

they know that under this budget the amount of debt held in 2008 will double to $12.3 trillion by 2013 and triple to $17.5 by 2019. and the question they keep asking is when will washington come to it's senses and realize we can't afford all of this. all of the bailouts, stimulus, all of it is paid for constituents hard-earned dollars. they seem to express concern about it. they want to know what we're going to do about it. they fail to see the return on investment that some have promised. result they've lost faith in government spending. as we consider the 2011 budget with you, we need to be thinking about how we can restore that trust. that trust beginning, i believe, with transparency and accountability. my years serving the united

states congress, i've made it my mission to ensure that transparency and accountability are more than just buzz words. they have to be meaningful. i've held both republicans and democratic administration to the same standard. when president obama was running for office he promised to make government quote, open and transparent, end quote. he also promised to provide a window for all businesses in america. actions speak louder than words. unfortunately, a year into this administration, we have seen the principal is not always put into practice the way it was talked about in the campaign. transparency and accountability require an open and frank dialogue between people's representative in congress and those in the administration. at this time, i have other ten responses overdue from the department of health and human

services on matters ranges from health care fraud to public safety. those are listed up in the number of days we've been waiting for answers. if departments across the federal government, i think my oversight efforts are held up, frustrated, and impeded. peded by bureaucrats that seem more interested in politics. the american public was led to believe that more could be expected when they voted for the president that wanted change. promises were made, principals based on transparency was repeated over and over again. obviously, the vast majority of americans believe. i want to continue to work on the american's people government for it's actions and ensure the administration's conduct,

business, in the open and transparent manner that was suggested. for all of these accountability and transparency problems persist, i'm pleased to see that fraud, waste, and abuse in medicaid and chip has a prominent role as it should. if we learned anything during the health care reform debate, it was fighting health care, fraud, waste, and abuse is really a bipartisan priority. we all have seen the straggering estimates of around $60 billion of taxpayers money being lost. this seems to be a conservative estimate. so i look forward to hearing from you madame secretary, today on the proposals to strengthen fraud, waste, and abuse, prevention, detection, and enforcement. before congress can weighs the merits of your legislative proposals as well as your request for increase funding, we

need to know what and how you are doing with what you currently have. i mention earlier, congress has the duty of government oversight. this includes reviewing annual reports that you are required to produce. one of these annual reports is on payment air rates. latest one was due last november. congress has yet to see payment for specific types of providers. obviously this seriously impedes our ability to oversee and evaluate how the federal government is addressing fraud, waste, and abuse. so i look forward to hearing from you today on the status of that report. mr. chairman, in regard to that, i ask enormous consent that the slides on payment error rates from cbs be entered into the record. >> objection. >> thank you. >> in addition to fraud, waste, and abuse proposals we propose a

six month extension to states. while i do agree, the states still need assistance to make ends meet, it's time for congress to cut the strings attached to the aid that we are sending them. as states struggle to balance their budgets, having the federal government provide them assistance that prevents them from touching medicaid doesn't make much sense. we should give states control of their budget so they can be more efficient with how they provide access to care. and of course you are a former governor, so i hope you would agree with that. flexibility is very important to being a governor or state legislature. i look forward to discussing this and other issues with you. thank you. >> thank you, senator. thank you very much. i'd like to welcome our witness, former governor from kansas, hhs secretary. we're honored to have you here. madame secretary, as you know your full statement will be included in the record. we urge you to summarize it. we usually have a five minute rule here.

we'll give you a few more than five minutes. why don't you proceed. >> committee members i'm glad to be here today to discuss the president's 2011 budget as it regards the department of health and human services. and i think you'll find the budget builds on some themes the president laid out in his state of the union, strengthening security and opportunity for america's working families, investing to build a foundation for future growth, and bringing a new level of accountability and transparency to government. and it abides by the president's pledge to try touche programs that are redundant, o lease, or ineffective. as you know health and human services provides the health that americans depend on and delivers human services to many of our most vulnerable populations. we think that it's important to make some of the investments our country has been putting off for years. including investments in

fighting health care fraud, strengthening our public health infrastructure, and getting more focus the on prevention and wellness. so i'd like to give a brief overview of department priorities focusing specifically on areas of medicare, medicaid, and chip. excuse me. and i know that we'll have a chance to deal with some questions and look forward to working with all of you as we move this forward. i would start with fraud and abuse as a ranking member grassley has already note thed, taking this seriously is something that is long overdue. it's something that the president feels very strongly about. which is why he asked the attorney general and i to work together in anti-fraud focus which is known as the task force better known as h.e.a.t..

we've already had some unprecedented success with seven strike forces with a data sharing system where we can monitor and observe changing patterns of billing practices and a whole host of new prevention tools which we anticipate will be enormously effective. so the president has included resources from new systems, and new personnel to focus on this effort. this is one the effort that is we know actually returns significantly more than any every vestment we make. tomorrow will be a year from the state that the children's health insurance program was expanded. we know in 2009, 2.5 million

children got coverage from chip. the outright effort we take very seriously provided by congressional funding. we intend to work with state and federal partners to identify and enroll the estimated 4 to 5 million children who are eligible right now but still not enrolled. the budget does extend the s map enhanced map that congress applied in the recovery act. as a former govern, you can tell you this is one universally welcomed relief for states that not have seen their states recover. since medicaid is one of the most significant expenditure that is any state in the country makes in terms of the percentage of the budget spent on health care having an enhanced federal

match is something that is supported, i think, by republicans and democratic governors. we ensure access to up-to-date health care with seniors and people who depend on medicaid. with new operations in cms that will help us change from a relatively antiquated claims process into a care system. making the next generation in health care technology to help providessers raise the quality of care for all americans. continue to fund patient center research projects which empower providers and patient to get the most up-to-date information about strategies and protocols that work well. this budget also chairman baucus referenced the payment rate. the budget assumes 0% for

physician payments reflecting the last number of years that congress has taken care to make sure that seniors did not see a dramatic decrease in the providers rates for their doctoring. we support the longer term and look forward to working with congress so this doesn't continue to be a yearly debate. there is a continued following up on the recovery act, but an additional estimate that will provide 25 new sites and will eventually provide care for about 20 million people a year, three more that were served in 2008, high quality, low cost

health care. recognizing that health care delivery falls short unless you have the providers who actually deliver that chair. the indian health center continues to be a presidential priority trying to live up to the commitment made generations ago to american indians and alaska natives in trying to reduce the woeful health disparities that we continue to find. our budget included new funding for a 21st century food safety system. through the food and drug administration. we right now live in a global food marketplace just, for example, half of our fruit and nearly 2/ 3 of our seafood comes from overseas and yet we have a 20th century inspection operation. we resigning the food safety system which gives american consumers the confidence that

the food that they serve to their children is safe, is something that we again take very seriously. following the signing last year of the tobacco legislation, the budget makes a serious investment in the battle against smoking. we saw dramatic decreases in smoking rates for years in america. but they now are holding steady at 20%. frankly, that's y way too high. additional focus on better ways to stop smoking, new research, community-based projects, is part of this ongoing effort to try to lower the dramatic cost that are underlying a lot of the chronic health conditions and directly related to smoking. public health security continues to be a focus. we know that we need to be better prepared for our public health emergencies, whether it's caused by natural disaster or by

attacks by our fellow man. we know that medical countermeasures stand at the front of our readiness efforts. the vaccines and treatment and respirators that help reduce the spread of infections. we've all had a bit after wakeup call. responding to the first pandemic in 40 years. having an opportunity to look at where our system worked well and where they were gapped. so we continued to believe that funding new strategies, new technologies, new research through nih work at the fda on scientific breakthroughs. but also looking at a whole host of medical counter measures is more important now than ever. i've asked my assistant secretary for emergency preparedness to actually use the h1n1 experience as a template

but give a report back by the first quarter of this which i look forward to sharing with you to look at where the gap in our responsive system are and what kind of straights on a multiyear basis we need going ahead. and finally, mr. chairman, i wanted to mention some of our critical programs that don't deal directly with health care but deal with human service side of our budget. we know that investment in children, particularly at risk children, continue to be a terribly critical factor in how well and prosperous they may be in later life. so this budget again focuses on early head start and head start providing enough resources to serve about 66,000 more young children than just two years ago. but what we know is middle class families are not just taking care of their kids these days. often they are dealing with aging parents. so there is a new family

caregiver program recognizing the fact that about 80% of long-term care services are provided by family members. often, that's great news for the elderly family member who gets to be cared for by loved one, but it can be financially and physical ly exhausting for the care givers and aging additional support for everything from counseling, for care givers, assistance, and adult day care centers, for periodic stays, respiratory care, transportation help to assist families who are trying their best to balance these care giving roles. and states and communities is -- are also part of the focus on some additional relief under the tnf program for some of the essential services that they are providing.

so mr. chairman, that's some brief highlights of the health and human services budget focuses on the health and well being of americans and delivering essential human services. i think that we continue to work to improve the everyday lives of americans. i look forward to grew the health and well being of american people and answer some questions about this budget. :

it just seems quite clear that there is a trade-off, an employer providing health insurance has to pay for it, that is lost wages. and the more we can get health care reform passed to lower the rate of increase in health care costs, the more that's going to help the employees get higher wages and if you could just expound on that, madam secretary, help explain to all of us in the country basically white health care reform and really is a job creator and helps businesses and employees keep jobs. >> well, mr. chairman, not only

as a the health care sector a huge part of our overall economic picture represents about a sixth of the overall gross domestic product in america so in and of itself doctors, nurses, health care providers, hal i.t., workers, a whole host of workers in the system are certainly part of our economy, but just focusing on small business owners who are often regarded as the critical engine of their american economy and produce more jobs in the long term, i hear over and over as i travel around the country about the crushing cost of it health care for employees. a small business employers are often in a catch-22 if they don't provide coverage for the employees they list of employees, they can't retain the best and briohuest to follow health care to the bigger company or the bigger markets.

>> this bill will help small business. >> there is a major incentive and, in fact, would go into affect in 2010, one of the early deliverable in health reform and to assist small business owners to essentially stay in the health care market, coming to the market and eventually there would be not only that the assistance of but an opportunity for lower income workers to have coverage. again, i think the job picture is you not only would have a more productive companies but would be more globally competitive and be able to by reducing the overall health care cost -- shifting the industry to industry have an opportunity in this global marketplace to compete more effectively whether selling cars for which it with competitors around the world. at think the third aspect of the jobs aspect is having more productive workforce.

how often wallace, prevention of illness and long-term chronic illness, keeping employes and the workforce, reducing sick days has a direct positive impact on our workforce. we have poor health results in many countries around the world of. we have employees who live sicker and die younger than many places, so having those kinds of investments from health reform and more productive workforce i think in the long run makes america a more prosperous. >> is health care reform necessary for hhs to start implementing some new ways to reimburse providers to get to reimbursement based on quality as opposed to quantity, that is limiting the free admissions were excessive. mission and in hospitals poor example. one another example, don't shoot the legislation in order to begin to enact a lot of these reforms which will clearly began

to reduce the rate of growth of health care costs? at the same time improving quality, same time improving quality. >> in both the house and senate bills there is a major direction to begin shifting it payments system to quality outcome so that everything from prevention and wellness, eliminating what americans now pay income pays for a preventive care, so encouraging screenings and saving lives of cancer and other chronic illnesses that can be identified early and corrected, but also as you mentioned hospital based infraction it -- we have 100,000 americans each and every year dying not because of what brought them to the hospital but what happens to them and the hospital and so a focus on hospital based infractions and really directing our payments system to provide incentives who do very well but eventually stop paying import here that is partly delivered or makes people sector.

>> thank you and my time is expired but i appreciate that. senator grassley. >> this week i wrote to express my frustration with the lack of responsiveness -- last week i wrote to express my frustration with the lack of responsiveness and to my request from hhs insubordinate agencies, are still waiting for responses to more than a dozen letters i sent last year to hhs, fda, cms and cdc. in my letter last week i asked you to get back to me by january 29 but haven't received a response for me so i please like to have to let me know when i'll be getting a complete response to all of my outstanding requests. >> well, senator, i share your interests in transparency and

the openness. i know that we are now on a regular briefing schedule with your staff members of. we are attempting to respond as quickly as possible and as early as possible to the information you requested the. my information that we have a given incomplete responses into a number of of the requests, we are still working on and what i can assure you is as quickly as we get the information together we will get it to you. i know the staff correspondents often is ongoing and conversations are ongoing to clarify and make sure we're getting exactly what you want. >> it seems to me that one of the problems is expediting the clearing process within the departments and agencies so that letter is from congress are answered thoroughly and delivered in a timely fashion. what are your plans to expedite that clearance process? i mean, it sounds like the letters are written, sitting on

some of his desk for approval. >> well, senator, as you know, we have a large agency which is not an excuse for untimely responses. i have met on a regular basis with our executive and secretariat and actually now receive at my request a weekly report on the status of correspondence, where it is, who has guided, and following through the pipelines. so i am taking this very seriously and personally. >> well, you can see up here -- >> actually i can't. >> how many days it's been a, but waiting for responses and it seems to me like the list keeps getting louder and louder. you know, one if we answer our letters as senators like that we wouldn't get reelected. let's go on a. on another issue. as i mentioned in my opening statement i'm a strong supporter of transparency and

accountability and as president obama mentioned that he's disappointed there hasn't been more transparency in the health care debate. the budget assumes comprehensive health care will be enacted. in order for that to occur unassuming negotiations between congress, the white house, stakeholders are continuing to take place. could you commit to me today that going forward in any negotiations involved, and the other senior staff in an effort to pass comprehensive health reform will be done in an open and transparent manner? >> web -- senator, i don't know what conversations with senior staff you're talking about. and our staff is available to you and your members and me with our regularly and available to other members. i don't control the negotiations that go on between the house and senate or the conversations are staff provides technical support across the board. >> so you're saying that your staff is anything, they are more for technical support?

they are not involved in any negotiations representing the white house or anything like that? >> i have conversations on a regular basis with republicans and democrats but i don't convene the house in the senate and i am not a principal in the negotiations your and my staff with. >> i wrote to you in december asking you to explain why congress didn't receive the the fiscal year 2009 comprehensive it era testing records, and that reports was supposed to be out in november. the annual report shows national payment air raids for medicare fee-for-service program, shows improper payment rates were each typewriter like hospitals or dmv suppliers and congress relies on this reports to evaluate how well or how not so well medicare is doing when making payments. i also ask you to tell me when i can expect a final report and you haven't responded to that letter.

i have before me as i already showed a this senate -- the senator for putting in the record, cms november presentation to committee staff of fiscal year 2009 and medicare improper payment rates. each member here at the diocese has copies. everyone i hope would turn to page eight of the slide nalc in november 2008 the rate for durable medical clement was seven and three tenths in november 2009 that number jumped to 51 in nine tense% in a very significant jump. if you go to page 10 and that number goes up even higher to 73% from 73% is the rate that cms got winning use the quote on quote the stringent criteria for calculating the air raids. the criteria that is supposed to be using. so question number one, how do you explain sitting on these numbers especially when this country is in the midst of

health care reform discussions regarding legislation that would delegate more authority to the department on a broad range of financing and delivery system changes and new piven models? >> well, senator, i think a couple of things. first of all, i think that we took our very seriously the previous with criticisms by the inspector general that the previous administration under hhs was not being accurate about its payment rates. >> i agree with you. >> and i am pleased to hear that so that the change who this year using the criteria that we agree should have been used for years was a new system. i would like to also, i know you are well aware of this since you follow this closely but to make this clear to other committee members, an error rate is not a fraud rate. there are different issues. it could be as little as the doctor's signature not being illegible or something in the wrong column, but again we think

it should be accurate. we are working diligently under this new system. we put out the global lubbers in november and at the time the budget was due. at the time of the report was due. we hope by the end of this week to have the underlying numbers but the shift has not been one that has been necessarily in very quick because it's been a change from a traditional system and in every single error rate, we need to recalculate and we wanted to get it right. we want to abide by what the inspector general said we should have been doing all along and i promise it will be handled delivered to you but i've been told by the end of this week we should have all the underlying numbers ready to go. >> thank you and i hope you realize 73% is very high rate of error. >> i understand. senator rockefeller. >> thank you, senator grassley. secretary sibelius, and glad to

see. a couple of points to make. one with respect to what senator grassley who is my dear friend, who essence of good things in his election years in the omaha paper and? >> omaha. >> des moines. >> i was concerned about something else, i didn't give you the proper respect -- would you please repeat it? >> i got the wrong. >> the des moines register. >> and that was the point. i was saying that he and i have a good relationship. >> we do have a good relationship. >> but it also occurs to me that sometimes in this question of i thank you have 70,000 employees, with you have responsibility over an enormous rate of things and i don't know how many letters i write to but i often find that it's a good thing and so does my staff's sometimes simply to call either you in my

case law or in their case so of your staff because letters can be very inefficient. number one, they take a much longer time to get over to you and then get back to you and have to go through a process and sometimes are put in general language, sometimes just a phone call and as you indicated the staff being in touch with staff is what i find the best way to try and work problems out. i'm just saying that. for whatever is worth. isn't it true if that times -- is it true that health care is the single at this point to the single greatest economic engine in the united states economy? that is in terms of growth of jobs. >> that's an accurate standing. >> my understanding is over the past two years there have been

six and a 31,000 new jobs simply in something called the healthcare sector. and that there have been just the last month, 22,000 new jobs which is interesting because the economy isn't doing well. as has been explained and people are frustrated by that and we're trying to work on how we can create more jobs. well, if we can just do health care reform, get it done, we will have contributed enormously to that and it's already producing an enormous number of jobs. so to me is one of the best and i think that's according to the bureau of labor statistics so i am not doubting what they say, let me shift just a bit -- there are over 100 community health centers that applied to for the american recovery act, the bonding, and received in my own

state the applications and that we had a there received about 90 percent score on the proposals for facilities investment program. but they were left unfunded due to funding limitations. now, you talk about the important link between health care investments and economic growth. don't you think it's also possible that if -- if we come back with a jobs program. these are very important, it is light health service corps people. if you don't have them, you suffer. if you do have them, your people particularly in rural areas which i have a great number of, they gain enormously. that if there are shovel ready

projects and i'm sitting right now and again of community health centers, that if we get some more money for that there would be possibly do more that particularly with people who scored 90 percent or over on your own criteria. >> well, as you know, senator, it was the recovery act that provided a major investment in community health centers and they were wildly oversubscribed by terribly i think beneficial projects that just weren't able to be funded based on the amount of money available, but no question having the health center then produces workers in that area and they operate as a community center often and have a huge beneficial a fact on neighborhood and well-being on workers and on jobs. it's a construction project and a long-term service project.

so we appreciate the continued investment in the 2011 budget. i think it's definitely a jobs program that also yield better health results for the communities in which there are located. 20 million americans have a low-cost preventive health care for themselves and their families based on a these community health centers and often a the strain on hospitals and community hospitals is reduced as a result because people are accessing health providers more appropriately, not going to emergency room doors, but actually getting help through a health center. so i think it has lots of beneficial ramifications. >> good, my time is up for the moment. >> thank you, senator rockefeller. senator wyche is next in. >> thank you, senator grassley, and an well, secretary sebelius. secretary sebelius, we're obviously all pay attention

today to the fact that the budget assumes that comprehensive health reform is enacted and there would be savings of about $150 billion over the next decade. now, the president has said that in an essential part of a comprehensive health reform is expanding consumer choice and competition and i share the president's view. one way the president seeks to promote choice and competition is by creating a working market place. now and, in fact,, a set of exchanges. candelight farmers markets where people can compare the various products. how would in your view creating these health insurance exchanges contribute to the savings that are envisioned in the budget? by enacting comprehensive health reform and. >> well, senator, i think that

having a new marketplace as you say with competing private sector plans which is what is in addition end, not only has a beneficial effect for individual purchasers so small business owners from the self-employed americans, others who often struggle with the high cost of care right now would have some choices, would have some options. but also i think in the long term competition is a great market strategy and if you have competition versus a monopoly you really have an opportunity for the market to work. so my experience running a state employee health plan in kansas was that we made sure that employees had at least one other choice, at least two choices wherever they live in the state.

to summer actually treated by the same system to provide competition and what we found was the best prices at the lowest cost. people wanted access to that pool of workers, they wanted to end kansas we have at the largest health pulled in the state, 90,000 covered, people wanted access to that and ended them being very competitive in terms of the prices and services that they offer. that would operate within states in multistate areas and i think give folks choices right now that they don't have right now. >> i want to continue to work with you and the president on this. as you know, my concern has been that most americans don't have choices today and, of course, a member of congress can fire their insurance company. they can say in 2009 if you're not treating me well i can go somewhere else in 2010 so i intend to work closely with you and the president and chairman

-- chairman baucus and senator grassley on this because there isn't a market place today and we need one. let me ask you if i might add about another area i know we share similar views on and that is the treatment of those who are chronically ill purell the evidence shows that summer in the vicinity of 75 percent of the health care budget goes for a relatively small percentage of the population, may be 10%. there are bipartisan bills in the senate, senator. and i, for example have one here. also in the house, it markey and christmas, to promote what is called independence at home and there you have, in fact, a coordinated team of practitioners who, in fact, agreed to take lower payments so that it does not add to the deficit in order to get better care for people at home. you all don't have that in the budget and i would just like to hear your thoughts about what

kind of priority the independence at home and effort would be for you and the department in the years ahead. >> well, senator, i think that concept would be embodied in one of the health reform components in that centers for innovation, certainly one of the strategy is that is operational in some areas and, in fact, in the northeast corner of the country we just added medicare to a provider coordinated care strategy that is under way in vermont and northern massachusetts which operates very much along that way. i think it's a huge priority. back to the state issued as a former governor, the total eligible population, those who are poor enough to qualify for medicaid and those who are old enough to qualify for medicare are again the fastest rising cost in the medicaid budget of

any state operation. and often are chronically ill, often have multiple issues and states are way out ahead of the federal government right now in looking at ways to deliver better care at a much better cost and certainly the independents at home is one of the strategy is. it has a huge party for me. >> thank you. >> thank you mr. chairman and ask that my statement be made a part of the record. >> without objection. >> madam secretary, community health centers receive an increase of $290 million for the 2010 budget which is on top of the 2 billion and they received in the stimulus package in addition to the budget assuming that the health reform is passed and that would provide mandatory and unlimited funding for community health centers. the president's state of the union address, he said families across america are tightening their belts and making tough

decisions. the federal government should do the same. how it is mandatory and unlimited deficit spending for community health centers with additional increase of 290 million plus on top of the $2 billion provided in the stimulus package representative of those comments? >> senator, i think that the experience of health providers, of patience, of community leaders across america is that to the investment in community health centers has been a great way to lower health care delivery cost. regardless of where they are in the country, the delivery of highly effective preventive care at a significantly lower cost than sort of a competing systems has been proven and in the ability to reach out in this case to lots of americans who either don't have insurance coverage at all or who have very

modest coverage. again, it's been very attractive in terms of preventive care delivery. so i think that's i think the increased foot prints up community health centers working in tandem of which they do in many parts of the country with a primary delivery system with community hospitals, a provider groups, has been a wonderful way whether people have insurance or not to deliver health care and a very cost-effective strategy. >> i've been a supporter of the community health centers but this seems to go quite a ways and another as some private entities have sprung up in the meantime like minute clinics that are supplementing this and then this seems to me to be quite a huge increase. it but to move on to a different subject since we have limited time, i think you're chief actuary, richard foster, said the medicare payment cats and the senate bill could lead to as

many as 20 percent of all hospitals, nursing homes and other medicare providers to have to operate at a loss. how many jobs would be lost if one at of every five health providers is losing money and therefore those out of business? do you think that mr. foster's analysis is correct that the level of medicare cuts and the senate bill may be unsustainable? >> senator, as you know there have been lots of different analyses of the various strategies regarding medicare. i think the most obvious point about medicare right now is that it is unsustainable on its current course. it is schedule with the current situation in to be totally out of funds within nine years and those numbers change every year

so that it is clear that not doing something, that doing something is necessary and one of the things that i think our department took very seriously need was looking at strategy is for areas where we are overpaying for various services and goods, overpaying and subsidizing private insurance companies for various kinds of medicare advantage programs, not taking fraud and abuse seriously which again returns money. we have already in the less than one year i have been at the head of hhs, we have had over $4 billion returned to the medicare trust fund that based on various kinds of settlements and fraudulent activities that we have shut down. so we are taking all of that very seriously and i think that

clearly if you have is some significant reduction in and providers of with the medicare system and there would certainly be a job loss but again the most imminent loss of its jobs is 21 percent pay cut to that is facing medicare providers if congress doesn't fix the sgr rate. that would be a dramatic job loss i think for seniors around this country. >> i have known and that medicare needs more bonds and i know that the $5.5 trillion we're talking about could go to medicare to fix some of those things and i'm hoping we will take a look at that. ..

>> i've seen as much as 10% of medicaid payments are improper payments which cost they paxer $3.6 trillion in 10 years. you know, this is a shared expense program. the state and the federal government share in that expense. i've been trying to -- my staff has been trying to get from your staff since july a detailed statement about improper payment rates. and so far we've been refused that information. you may not be aware of that. i wanted to bring that to your attention. i'd like to ask you, would you see that information is provided

to us so we can make a better informed decision about your proposal to spend an additional 26 billion dollars on the medicaid program? >> yes, senator, i would. i would -- i'm not specifically aware of your request. i assure you i'll check into it. as you know though, our department does not pay the medicaid providers directly. that really is done at the state level, the contracts are led at the state level. each state has a different kind of arrangement. our medicaid program does not look like iowa or nebraska, our providers were different. one of the difficulties, senator, may be that collecting that data from 50 states around the country and updating it and making sure it's accurate maybe one of the channels. we don't hold the data in the department of health and human services. >> of course, 50% roughly of those are federal tax dollars. >> we pay that.

but we don't contract with the providers. >> i understand. i think your department would have an interest -- >> absolutely. >> -- federal or state dollars are being squandered. >> we have a whole series of new initiative that is will be worked out for our state partners to look at fraud, abuse, and air rate to the medicaid program. >> i'd like to get to that in a second. that's why we state by state numbers which is what we requested from your agency. we'd like to know whether the improper payment rates are payment errors or errors in determines eligibility. that's what we want to get information. we're not reaching any judgment. would you like to get the information? and i appreciate your commitment to work with us to get that information promptly. but i would like to talk to you just a second about fraud and abuse. as a former state attorney

general i can tell you that neither the federal government or the state governments have enough resources to chase the fraudsters and the people who are trying to cheat after the fact. we need to do a better job on the front end of seventy if if -- certifying providers. i would like you to look at the taxpayers protection act which does exactly that, tried to stop it on the front end as opposed to chasing it on the back end. i'm not be critical. i don't think you'll ever have enough resources on the state or friend level to chase the fraudsters down. i think that's why we need to start on the front end. >> senator, i agree with that. definitely take a look at your legislation. we have begun some new

certification practices, durable medical equipment was one that we had a huge increase in some erratic building. we've instituted third-party verification, more providers number, a much tighter, but i agree, every scheme we come after the back end, there'll be a new scheme at the front end. i'd look forward to looking at your legislation. >> thank you very much for that. i appreciate it. >> sure. you talked about the fact that medicare will become insolve vent -- insolvent in less than a decade. that will become more often as they see us spending on the programs and failure to meet the current unfunded liabilities. while we've heard that health care reform is entitlement reform we know that dr. elmendorf in the congressional budget office that the health

care bills, reform bills cannot be used to both pay for health reform, and address the solvency of the medicare program. he said the key point is the savings to the hospital insurance trust fund under health reform would be received by the government only once. so they can't be set aside to pay for future medicare spending. and at the same time, pay for spending on other parts of the programs. at least in dr. elmendorf's opinion you can't double spend that money. can you talk to us about your proposals or the administration proposals to deal with the $38 trillion in unfunded liabilities for medicare. i think the health reform does include a number of propoa proposals which would certainly

slow the growth rate of the medicare trust fund spending without violating any of the benefits relied on not only by seniors but some of the disabled citizens. they not only look to save money in the overall purchase of prescription drugs, they look to make sure that we are not paying for or over paying for services and procedures that are not cost effective. they slow the growth rate in by having competitive bidding in areas like durable medical equipment, getting a better bang for our buck while still delivering services to beneficiaries. also i think there's an enormous amount in health reform that anticipates prevention and wellness and having a different kind of strategy so that you don't wait until a senior enters

medicare and paying for acute, but hopefully underlying conditions for diseases. >> thank you, senator. you're next. >> thank you, mr. chairman. madame secretary, welcome. one of the first questions is low income assistance. it is a critical program for my region and throughout the country depending on the severe circumstances of the weather. and senator reid of rhode island and i sent a letter with 46 other senators that the methodology that was used to distribute the low income funding, the release of emergency funding and 490 that was reloosed. we set aside the heating degree days. our state receive 50% less and so did rhode island. on the heating degree fund, states like florida, and i

understand it's unusual cold in florida received $3.9 in emergency assistance, texas, alaska, maine, received nothing. 30 would have 30 heating degree day, last december maine would have been 375, 44 times the energy required. so i'm trying to make sense of what was methodology used. i'm not arguing they shouldn't have received funding, i'm arguing why there was such difference in the amount of funding that severe cold weather states received in the release of this emergency funding. last year maine received $29 million, this year $14 million. if you use unemployment, rhode island has the second highest in the country. we submitted a letter to you. i would appreciate if you have a response here today to

understand better why the money was distributed in this fashion. >> certainly, senator. we will get the detailed formula to you. but there were several factors this year that were looked at. one is that the cost of heating oil is significantly lower this year than last. which affected some of the cost in the northeast states which rely heavily on heating oil. i think it was over $100 last year and it was down below 80 this year. so there was a significant wave. as you've already said, some of the southern states have particularly cold snaps which again was not a factor a year ago and needed to be calculated in. and thirdly, the formula not only included the overall look at the heating issues, but also unemployment numbers. so those three factors were the formula used this year so

redistribute the funds. >> i think you would degree that dramatic change given the enormous cost in heating oil that could be $50, $70 a barrel. and atz it was this winter in a state that has very low wages. i think that's true for a number of the states that have the signed the letters as well for the senators that represent the states. i hope we can further discussion in the future. i understand the situations that occurred. i'm not denied they shouldn't have had funds. i want to make sure we have a fair and equitable consideration, especially during these very difficult times and the fact that, you know, home heating oil is very expensive proposition where 80% depend on it, frankly. on the issue of health care reform, we talk about jobs.

the reverse is true as well. what i'm hearing in my state among small business owners, very concerned about the calculation of the potential cost that could arise with health care reform. it was one of the big issues, i had a number of farms in maine. that was sited repeatedly. the potential for raising the coster doing business. they would hesitate to invest in future capital equipment or jobs, i heard that repeatedly. we talk about medicare, an 62% increase. that was included in the legislation. employer mandate. so there are a number of issues that could potentially raise the cost of doing business. i have concerns that's going to depress the ability, you know, of small businesses especially to turn around the economy. we talk about the tax credits. they are important. but it also requires small businesses to pay up front. they are going to have to pay up front to lay down the money to

get the benefit. they might not even be in that position. so i think we have to look at the overall calculation in all of this. there are some things we can do sort of the comprehensive reform immediately on the legislation, senator lincoln and i have have introduced on small business exchange. bipartisan bases that would help to open the doors. you know, to small businesses at the very least. that should have been done long ago. i also think we have to calculate what is the impact of health care reform as it's already been designed on small businesses and the potential to lose jobs as well. >> senator lincoln. >> madame secretary, do you wish to respond? senator snowe's time has expired. it's courteous for you to get an opportunity to response. >> the job calculations for

small business owners is huge. i did a couple of forums in maine, heard from some of your constituents directly. i do think the look of the listens, as, you know, the small business tax credit in both of the senate and house bill would kick in in 2010. there would be a more affordable market down the road and fixes in the system along the way. i think it's always important to look at the impact. i think there's no question that the group being squeezed in the current health care marketplace is often self-employed and small business owners who with have no choices higher prices and fewer options. and often lose employees based on the fact that they can't keep them. >> thank you, very much. senator lincoln? >> thank you, mr. chairman. i want to thank my colleague from maine from bringing the issue up. i believe the longest percentage

fall into small businesses, working for small businesses, self-employed, contractors, i think it's a great step forward of what we could be that would be meaningful. i certainly enjoy working with her. she does a great job. i'm pleased with what she does. just a couple of questions i'd like to throw out, maybe you can answer them. i think i have about four here. i just want to touch on the technological divide. in your original notice on health i.t., you were going to fund rural states, those with underserved areaing and those who needed to catch up. unfortunately, in your funding for health information exchanges and other grants like the beacon community, it appears the funding is on a per person ratio or funding communities that are more advanced. problem with that is we never get started in rural america. i would like to see some assurances that the health information technology is going to be available to all

american. particularly like those in my state. and making sure that this digital divide does not contribute to the increasing health disparities that exist in rural america between rural and urban citizens. i hope that y'all will focus on that and help us in terms of making sure that everybody is going to have a fair shot at the health i.t.. the older americans act, it's the nutrition programs were provided with urgentty $100 billion under the recovery act. however, the budget, the fy2011 budget only totals about $8 million. my concern is the recovery funds that are going to be expended and hoping or really questioning why the elderly nutrition programs are not included in the recovery extensions in the president's budget. i think that's something to focus on. the elderly are one of our most vulnerable groups. i was pleased to hear senator

wyden bring up the coordination of care and all of the efforts. hoping that you can elaborate on the care demonstration. i've been working very diligently on those over the past several years and understand the importance that plays for us. also getting better outcomes particularly in medicare. one other thing the department released that draft of the healthy people's 2020 report. and 216 pages it contain the 556 objectives. which is is great. we're glad to focus on things. the words alzheimer's or dementia was not listed. noting that it affected about 5.3 million americans with the number expected to ride rise by

mid century to as many as 13 americans. i hope that you can look at the possibilities of perhaps before the publications final report looking at editions that would at least include a separate topic area perhaps on alzheimer 's disease just as the other top ten causes have in that report. i think it would be a strong message that we are focused on that in this country. and then the last would be the medicare extenders. i want to compliment the chairman and these different issues that obviously we feel like are going to fall off the edge of the cliff. whether it's the therapy gaps, physical therapy, the pathology also, i think the ambulance, rural hospitals and others. i know you and have visited on the phone about that. if the administration does not

have the legal authority to extend, what can you do to be helpful to us if in fact we can't get those moved down the road? how can we be helpful to those providers? that's a lot. i want to get it all out there. any of that you can jump on would be great. looking at different areas. the health extense offices which will be established throughout the country are very much focused on underserved areas and asset that is need to be brought in. that really is their primary objective is to make sure they are not sort of forgetten areas of the country, forgetten providers, smaller hospitals, smaller provider groups. so that footprint is very much aimed at that. i know that there is some concern that the nutrition aide for older american is not enhanced along with some others.

i would say that there are a variety of new strategies for older americans. but that, including the caregiver strategy and some others which have new funding in the budget. but i hear your concerns at this tough time that we need to keep, you know, seniors who rely on those programs in our sights. in terms of 2020, what i'd loved to, i'm going to carry that suggestion to dr. howard cao and actually have him follow up with you about that. i think that's one that is very appropriate to -- he is much more intimately involved with the recommendation than i. this is a great time to provide that input. the medicare extenters, we do not feel we have the administrative flexibility to merely push them down the line as we talked about there are strategies about, you know, holding bills that that can only be done for a period of time.

i assume that eventually if it's fixed legislatively we could do some retroactive repayment. at this point we don't -- our general council has looked at this very carefully and feels we really would be in violation of the law if we just ignore from the deadlines are for those -- >> thank you. thank you. senator, i might say we're thinking of putting therapy caps in the extenders. >> you've done great. you've done wonderful work. whatever vehicle is there. >> i think that'll be the legislation. thank you. mr. stabenow. >> thank you very much for your leadership on health care and health insurance reform. first just the comment, thank you to the chairman for working hard on helping to change the way we pay physicians through what's been dubbed the sgi. i know we're going to be doing

something there that's very important. i want to urge you madame secretary, this payment system, it doesn't work. i was pleased to author the legislation to repeal it. i still believe we need to do that. i hope the administration will work with us long term to do that. i appreciate your efforts to take the cost of prescription drugs out of that formula. which was a very important first step. but i'm hopeful that you will as well as look for other ways in which you can fundamentally change that. we change the incentives in health reform. if we are able to move that forward, i think it's one of the positive things in there. i just urge you to continue to work with that. >> look forward to it. and as you know better than many given your long efforts in this area, the uncertainty for providers and for patients about the future of their medical chair is really undermined the confidence in a great health

care system. and i really look forward to a long-term fix to making sure that we can live up to the trust that we've committed to medicare beneficiaries. they will have a provider and services delivers. >> thank you, we needed to get that done. i wanted to speak about and ask about graduate medical education. we need to get more students, more physicians into primary care and of course again that's another focus of what we've been working on with health care reform. and we know that there's a fraud primary care crisis. but i do want to note that we have hospitals that want to train more physicians. in michigan, in my state, i know in maine, florida, and other places. but they've been frustrated by cms regulation on new residency programs and medicare's graduate medical education program.

unfortunately, it was process was changed. i'm sure you are aware of this. but originally in the balanced budget act of 1997, there was concern expressed about plexability and hospitals moving forward. they were going to expand their residency programs. cms initially allowed hospitals to qualify for residency under a cap when they created new programs. and they defined the programs that would receive initial accreditation. it was a very straightforward process. hospitals move forward and so on. in august 2008, there was a new regulation that penalized program that received the initial accreditation. and unfortunately, this is resulted in revoking funding for programs that today, you know, are ready, willing, and able to go forward to be able to train

our primary care physicians. and, in fact, we have programs in michigan that -- who may close as a result of the lack of funding. and so given the fact that we need more physicians, we need more primary care physicians as we know. i'm asking if you would work with us to address this change that was made over a year ago and be able to allow hospitals to proceed to do what they had been authorized to do. >> well, senator, i would look forward to august 2008 was a bit before my time. >> and i'm aware. >> but i'd be glad to go back and revisit that and actually take a look at that with your staff. absolutely. >> thank you. and finally, i would just briefly urge and ask about your focus on mental health services. i've felt that one of the positives things that we have

done in crafting our health reform was to include mental health. >> you bet. >> and substance abuse services. chronic care and prevention. we are seeing states making drastic cuts in mental health services. i'm wondering what areas of the president's budget would improve or expand on these critical health care services. >> well, actually there's the -- the new rk forward to making sue that they are enforced around the country, and that certainly is as a result lots of good effort. we have a wonderful new administrator in the substance abuse and mental health area, pam, who comes with private and public sector experience in various parts of the country. she has already engaged in lots across government efforts. we're working on with the defense department on homelessness for veterans, we're working with the department of

housing on a chronically homeless kids. we are looking at substance abuse services as critical and prevention there's some exciting new studies about the ability to actually prevent mental illness. there are investment in the 20 1:budget that add to a number of community health clinics. which had no mental health services in the past, but now will have an infusion of invegasment to make sure along with primary care they'll before behavior health services available, more mental health professionals. so we are looking at areas across -- our agency and across the government where we can actually make sure that mental health isn't a silo off to the side. but it's part of the whole look at health care moving forward and a much more holistic approach. we have a significant dialogue under way with the agency for

children and families knowing that, you know, a lot of the prevention of substance abuse really starts at a very young age. and in making sure that we have those services able at head start and early head start programs also. >> thank you, thank you mr. chairman. >> thank you, madame secretary, it is a lot of concern about fraud, medicare, medicaid, and other programs administered by hhs. i think you'd agree are intuitive senses that a lot of those allegations are probably true. there is a lot of waste in the headline of fraud that we just don't stop. and senator came to me about the weasands fraud in florida and in the country generally.

i remember a couple of few months ago we were looking at home health care outlying payments and the percentage in florida and some of these counties are way, way, way above the per capita. the instance of seniors in those same counties. but his idea is there: we can take a page from credit card companies. as we know, if the credit card companies put together the very sophisticated mathematical algorithms about their credit card holders. just like google does, google knows what books you buy and wants you to buy similar books based upon your purchasing pattern. but theho